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, 2022
OR
For the transition period from ________ to ________
Commission file number: 001-38855
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Nasdaq, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
52-1165937
(I.R.S. Employer Identification No.)
151 W. 42nd Street, New York,
New York
(Address of Principal Executive Offices)
10036
(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, $0.01 par value per share
0.900% Senior Notes due 2033
0.875% Senior Notes due 2030
1.75% Senior Notes due 2029
Trading Symbol(s)
Name of each exchange on which registered
NDAQ
NDAQ33
NDAQ30
NDAQ29
The Nasdaq Stock Market
The Nasdaq Stock Market
The Nasdaq Stock Market
The Nasdaq Stock Market
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
Securities registered pursuant to Section 12(g) of the Act: None
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 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
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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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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, 2022, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $17.2 billion (this amount represents
approximately 341.3 million shares of Nasdaq, Inc.’s common stock based on the last reported sales price of $50.53 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, $0.01 par value per share
Outstanding at February 13, 2023
489,002,956 shares
Documents Incorporated by Reference: Certain portions of the Definitive Proxy Statement for the 2023 Annual Meeting of Shareholders are incorporated by reference into Part III of this
Form 10-K.
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.
[Reserved]
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
Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
Item 9C.
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 and Financial Statement Schedules
Item 16. Form 10-K Summary
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i
About this Form 10-K
Throughout this Form 10-K, unless otherwise specified:
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“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 CXC” and “Nasdaq CX2” refer to the Canadian cash equity
trading books operated by Nasdaq CXC Limited.
“Nasdaq First North” refers to our alternative marketplaces for smaller
companies and growth companies in the Nordic and Baltic regions.
“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 and listing
venue operated by The Nasdaq Stock Market LLC.
2024 Notes: $500 million aggregate principal amount of 4.25% senior
unsecured notes, repaid in full and terminated in March 2022
2026 Notes: $500 million aggregate principal amount of 3.85% senior
unsecured notes due June 30, 2026
2029 Notes: €600 million aggregate principal amount of 1.75% senior
unsecured notes due March 28, 2029
2030 Notes: €600 million aggregate principal amount of 0.875% senior
unsecured notes due February 13, 2030
2031 Notes: $650 million aggregate principal amount of 1.650% senior
unsecured notes due January 15, 2031
2033 Notes: €615 million aggregate principal amount of 0.900% senior
unsecured notes due July 30, 2033
2040 Notes: $650 million aggregate principal amount of 2.500% senior
unsecured notes due December 21, 2040
2050 Notes: $500 million aggregate principal amount of 3.25% senior
unsecured notes due April 28, 2050
2052 Notes: $500 million aggregate principal amount of 3.950% senior
unsecured notes due March 7, 2052
ARR: Annualized Recurring Revenue
ASC: Accounting Standards Codification
ASU: Accounting Standards Update
ASU 2016-13: Measurement of Credit Losses on Financial Instruments
ASR: Accelerated Share Repurchase
ATS: Alternative Trading System
AUM: Assets Under Management
AWS: Amazon Web Services
CAT: A market-wide consolidated audit trail established under an SEC
approved plan by Nasdaq and other exchanges
CCP: Central Counterparty
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.
2020 Credit Facility: $1.25 billion senior unsecured revolving credit facility,
which was replaced by the 2022 Credit Facility in December 2022
CFTC: U.S. Commodity Futures Trading Commission
EMIR: European Market Infrastructure Regulation
Equity Plan: Nasdaq Equity Incentive Plan
ESG: Environmental, Social and Governance
2022 Credit Facility: $1.25 billion senior unsecured revolving credit facility,
ESPP: Nasdaq Employee Stock Purchase Plan
which matures on December 16, 2027
2022 Notes: $600 million aggregate principal amount of 0.445% senior
unsecured notes; repaid in full, at maturity, in December 2022
ETF: Exchange Traded Fund
ETP: Exchange Traded Product
Exchange Act: Securities Exchange Act of 1934, as amended
FASB: Financial Accounting Standards Board
FICC: Fixed Income and Commodities Trading and Clearing
ii
NASDAQ, the NASDAQ logos, and other brand, service or product names or
marks referred to in this report are trademarks or service 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 and new listings of equity securities (including
issuers that switched from other listings venues, closed-end funds and ETPs)
is based on data generated internally by us; therefore, the data may not be
comparable to other publicly-available IPO data. 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 and Nasdaq First North 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 the
“Item 1A. Risk Factors” section 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.
FINRA: Financial Industry Regulatory Authority
FRAML: Fraud Detection & Anti-Money Laundering
IPO: Initial Public Offering
MiFID II: Update to the Markets in Financial Instruments Directive
MiFIR: Markets in Financial Instruments Regulation
MTF: Multilateral Trading Facility
NFF: Nasdaq Financial Framework; Nasdaq's end-to-end technology solutions
for market infrastructure operators, buy-side firms, sell-side firms and other
non-financial markets
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 2023 Annual
Meeting of Shareholders
PSU: Performance Share Unit
Regulation NMS: Regulation National Market System
Regulation SCI: Regulation Systems Compliance and Integrity
SaaS: Software as a Service
SEC: U.S. Securities and Exchange Commission
SERP: Supplemental Executive Retirement Plan
SFSA: Swedish Financial Supervisory Authority
SOFR: Secured Overnight Financing Rate
S&P: Standard & Poor’s
S&P 500: S&P 500 Stock Index
SPAC: Special Purpose Acquisition Company
SRO: Self-regulatory Organization
SSMA: Swedish Securities Markets Act 2007:528
TSR: Total Shareholder Return
U.S. GAAP: U.S. Generally Accepted Accounting Principles
U.S. Tape plans: U.S. cash equity and U.S. options industry data
UTP: Unlisted Trading Privileges
UTP Plan: Joint SRO Plan Governing the Collection, Consolidation, and
Dissemination of Quotation and Transaction Information for Nasdaq-Listed
Securities Traded on Exchanges on a UTP Basis
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• economic, political and market conditions and fluctuations, including
inflation, interest rate and foreign currency risk inherent in U.S. and
international operations, and geopolitical instability;
• the performance and reliability of our technology and technology of third
parties on which we rely;
• any significant systems failures or errors 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
increased regulatory oversight
the securities markets generally, or
domestically or internationally.
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.
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
future
operating results or financial performance, and other future developments are
intended to identify forward-looking statements. These include, among others,
statements relating to:
initiatives and strategies,
• our strategic direction, including changes to our corporate structure;
• 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,
transactional activities and other strategic, restructuring,
including
technology, ESG, de-leveraging and capital return initiatives;
• our products 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 and any
potential settlements of litigation, regulatory or governmental investigations
or actions, including with respect to our CFTC investigation.
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 customers or other customers;
• our ability to develop and grow our non-trading businesses, including our
technology, analytics, ESG and anti-financial crime offerings;
• our ability to keep up with rapid technological advances and adequately
address cybersecurity risks;
iv
PART I
Item 1. Business
Overview
Nasdaq is a global technology company serving the capital markets and other
industries. Our diverse offerings of data, analytics, software and services
enable clients to optimize and execute their business vision with confidence.
We manage, operate and provide our products and services in three business
segments: Market Platforms, Capital Access Platforms and Anti-Financial
Crime.
In 2022, we announced a new organizational structure which aligns our
businesses more closely with the foundational shifts that are driving the
evolution of the global financial system. In order to amplify our strategy, we
aligned the Company more closely with evolving client needs. As a result, we
have identified three new reporting segments, Market Platforms, Capital
Access Platforms and Anti-Financial Crime, which align to our new divisional
structure.
History
Nasdaq was founded in 1971 as a wholly-owned subsidiary of FINRA.
Beginning in 2000, FINRA restructured 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 an independent registered national securities exchange in 2007.
In February 2008, Nasdaq and OMX AB combined their businesses, and we
changed our corporate name to The NASDAQ OMX Group, Inc. 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. We operated as the NASDAQ OMX Group
until we rebranded our business as Nasdaq, Inc. in 2015.
Growth Strategy
To enable success in the evolving global financial system, we have established
our purpose, vision, and value proposition together with a focused growth
strategy:
Our Purpose: We advance economic progress for all.
Our Vision: We will be the trusted fabric of the world’s financial system.
Our Value Proposition: We deliver world-leading platforms that improve the
liquidity, transparency and integrity of the global economy.
Our Strategy: In 2017, we set a new strategic direction focused on
maximizing the resources, people and capital allocated to our largest growth
opportunities. These opportunities, which include anti-financial crime and
marketplace technology solutions, workflow for investment managers and
asset owners as well as insight solutions, constituted large and growing
opportunities where we felt our strengths in technology, analytics and capital
markets expertise, combined with our expansive client network, positioned us
to meet our clients’ evolving needs.
By aligning our business segments against these secular trends, we aim to
deliver more for our clients and increase growth across our key pillars of
liquidity, transparency and integrity:
• Liquidity: Within our Market Platforms division, we continue to modernize
markets by utilizing technology to maximize the liquidity of the global
economy. New technologies, including cloud, blockchain, machine learning
and artificial intelligence, present significant opportunities to further
enhance market resiliency and scalability and make markets even more
accessible. We believe
technologies will enable more
these
opportunities for market participants and new asset classes to be integrated
across markets globally. We brought our markets and market-related
technology businesses together, aligning complementary capabilities to
capture the potential these technologies can unlock in our industry. By
utilizing the division’s position at the center of markets, we believe that
Market Platforms will be at the forefront of the financial system’s evolution
and will play a critical role in advancing the modernization of markets
across geographies and asset classes.
that
• Transparency: Our Capital Access Platforms division is uniquely placed to
help clients navigate the increasing complexity of the evolving financial
system through access to capital and transparency which enables economic
growth. With over 10,000 corporate clients and 5,000 clients across the
investment management ecosystem, Nasdaq is a trusted partner to aid the
corporate and investment communities in making more informed decisions.
Leveraging the insights and capabilities across our listings, advisory, data,
index, and analytics teams, we believe that Capital Access Platforms will
serve as a bridge between the investor and corporate communities, focused
on enhancing the client experience by providing efficient routes to capital,
delivering more holistic, actionable insights and intelligence, modernizing
workflows, and navigating the climate and ESG landscape.
1
• Integrity: Our Anti-Financial Crime division combines Nasdaq's fraud
detection, anti-money laundering, and surveillance businesses. This division
remains focused on capturing the growth associated with protecting the
integrity of the financial system and fighting financial crime. The division
will continue its focus on delivering a world-class platform, leveraging the
power of the cloud and machine learning across asset classes, to the full
spectrum of banks and brokers, including the emerging ecosystem of
financial technology, or FinTech, companies and digital banks.
Products and Services
Market Platforms
Our Market Platforms segment delivers world leading platforms that improve
the liquidity, transparency and integrity of the global economy by architecting
and operating the world's best markets.
Our Market Platforms segment includes our Trading Services and Marketplace
Technology businesses.
Trading Services
We provide trading services in North America and Europe. In the U.S., we
operate six options exchanges: 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. Our combined options market share in 2022 represented the largest
share of the U.S. market for multi-listed equity options. Our options trading
platforms provide trading opportunities to retail investors, algorithmic trading
firms and market makers, who tend to prefer electronic trading, and
institutional investors, who typically require high touch services to execute
their trades, which are often performed on our trading floor in Philadelphia.
We also operate three cash equity exchanges: The Nasdaq Stock Market,
Nasdaq BX and Nasdaq PSX. Our U.S. cash equity exchanges offer trading of
both Nasdaq-listed and non-Nasdaq-listed securities. The Nasdaq Stock
Market is the largest single venue of liquidity for trading U.S.-listed cash
equities. Market participants include market makers, broker-dealers, ATSs,
institutional investors, and registered securities exchanges.
Trading Services also includes revenues from U.S. Tape plans. The plan
administrators sell quotation and last sale information for all transactions,
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.
In Canada, we operate an exchange with three independent markets for the
trading of Canadian-listed securities: Nasdaq Canada CXC, Nasdaq Canada
CX2 and Nasdaq Canada CXD.
In 2022, we began migrating our North American markets to the AWS cloud-
computing platform in a phased approach as part of a partnership to build the
foundation of new capital markets. During the fourth quarter, we successfully
completed the migration of Nasdaq MRX to the cloud. We believe the shift to
cloud-based markets will provide our exchanges with more security, greater
reliability, better scalability and the ability to quickly power up computing
resources. This will, in turn, enable Nasdaq to provide its clients access to
cloud-based capabilities, including virtual connectivity services, market
analytics and machine learning, at a lower cost.
In Europe, we operate exchanges in Tallinn (Estonia), Riga (Latvia) and
Vilnius (Lithuania) as Nasdaq Baltic and exchanges in Stockholm (Sweden),
Copenhagen (Denmark), Helsinki (Finland), and Reykjavik (Iceland) together
with the clearing operations of Nasdaq Clearing, as Nasdaq Nordic.
Collectively, the Nasdaq Nordic and Nasdaq Baltic exchanges 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. Our platform allows the exchanges to share the same
trading system, which enables efficient cross-border trading and settlement,
cross-exchange membership and a single source for Nordic data products.
Settlement and registration of cash equity trading takes place in Sweden,
Finland, and Denmark via the local central securities depositories. In addition,
Nasdaq owns a central securities depository that provides notary, settlement,
central maintenance and other services in the Baltic countries and Iceland.
In Europe, Nasdaq Nordic offers trading in derivatives, such as stock options
and futures and index options and futures. Nasdaq Clearing offers central
counterparty clearing services for stock options and futures and index options
and futures.
Nasdaq Fixed Income, or NFI, provides a wide range of products and services,
such as trading and clearing, for fixed income products in Sweden, Denmark,
Finland, Iceland, Estonia, Lithuania and Latvia. Nasdaq is the largest bond
listing venue in the Nordics, with more than 5,600 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. Nasdaq Clearing
offers central counterparty clearing services for fixed-income options and
futures and interest rate swaps. Nasdaq Clearing also operates a clearing
service for the resale and repurchase agreement market.
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In June 2021, we sold our U.S. Fixed Income business, which included an
electronic platform for the trading of U.S. Treasuries.
Nasdaq Commodities is the brand name for Nasdaq’s European commodity-
related products and services such as
trading and clearing. Nasdaq
Commodities’ offerings include derivatives in power, natural gas and carbon
emission markets, seafood and electricity certificates. These products are
listed on Nasdaq Oslo ASA, except for seafood, which is listed on Fish Pool, a
third-party platform.
Nasdaq Oslo ASA is the commodity derivatives exchange for European
products. All trades with Nasdaq Oslo ASA are subject to clearing with
Nasdaq Clearing, which offers central counterparty clearing services for
commodities options and futures.
We also own a majority stake in Puro.earth, a Finnish-based leading platform
for carbon removal. Puro.earth offers engineered carbon removal instruments
that are verified and tradable through an open, online platform. Puro.earth’s
marketplace capabilities add to our suite of ESG-focused technologies and
workflow solutions and give our clients further resources to successfully
achieve their ESG objectives.
In addition to our trading and clearing services business and our carbon
market offering, in September 2022, we announced our planned launch of a
new digital assets business to power the digital asset ecosystem. The launch
to advance and help facilitate broader
underpins Nasdaq’s ambition
institutional participation
trusted and
institutional-grade solutions, focused on enhanced custody, liquidity and
integrity. Nasdaq Digital Assets will initially develop an advanced custody
solution. Nasdaq’s offering is subject to regulatory approval in applicable
jurisdictions. Additionally, we expanded our anti-financial crime technology
with new coverage
including a
comprehensive suite of crypto-specific fraud detection capabilities discussed
below in “Anti-Financial Crime.”
in digital assets by providing
the cryptocurrency ecosystem,
for
Marketplace Technology
Marketplace Technology comprises our trade management services and
market technology businesses.
Our trade management services business provides market participants with a
wide variety of alternatives for connecting to and accessing our markets for a
fee. 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 launched WorkX in 2021, an upgraded version of Nasdaq ACT
Workstation, a web-based, front-end interface that allows market participants
to view data, utilize risk management tools, and submit and review trade
reports. WorkX enables a seamless workflow and enhanced trade intelligence.
All Workstation users were migrated to WorkX in 2022. In addition, we offer a
variety of add-on compliance tools to help market participants comply with
regulatory requirements.
3
We provide colocation 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
offerings between select data centers using millimeter wave and microwave
technology.
We completed the previously announced wind-down of our broker services
operations business during 2022. This business primarily offered technology
and customized securities administration solutions to financial participants in
the Nordic market. Such services and solutions primarily consisted of flexible
back-office systems, which allowed customers
to efficiently manage
safekeeping, settlement and corporate actions and reporting, and included
connectivity to exchanges and central securities depositories.
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, and powers over 120 market infrastructure operators and new
market clients in more than 55 countries. 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 by non-capital markets customers, including those in insurance
liabilities securitization, cryptocurrencies and sports wagering, as discussed
further below.
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.
During 2022, we continued to build out our SaaS business portfolio by
extending and migrating our current offerings to SaaS, where we added 11
new SaaS customers. Our market technology business has evolved from its
origins serving the capital markets, as we have leveraged NFF, our flexible
and modular architecture technology that provides next generation capital
markets capabilities in an open and agile environment, to develop our SaaS
platform and offerings. We expect to continue to expand adoption of this SaaS
model by our clients in the future.
For market infrastructure operators, which include exchanges, regulators,
clearinghouses and central securities depositories, we provide and deliver
mission-critical solutions across the trade lifecycle via NFF, which 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.
Recently, we have seen a growing demand for our products and services
outside of the traditional capital markets. Our market technology business
currently offers its services to several digital assets exchanges, commercial
real estate markets, the reinsurance market and sports wagering operators. Our
Marketplace Services Platform provides next-generation marketplace
capabilities spanning the transaction lifecycle to facilitate the exchange of
assets, services and information across various types of market ecosystems
and machine-to-machine transactions. The Marketplace Services Platform is
targeted at new markets and enables end-to-end marketplace implementation
without the resources required for on-premise solutions.
Numerous market technology 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. Our successful Nasdaq MRX migration to the cloud,
discussed above, created a blueprint for our Marketplace Technology clients
that will be used to demonstrate, guide and migrate their markets to the cloud,
as well as for our own future market migrations.
Capital Access Platforms
Our Capital Access Platforms segment delivers liquidity, transparency and
integrity to the corporate issuer and investment community by empowering
our clients to effectively navigate the capital markets, achieve their
sustainability goals, and drive governance excellence. As we operate in the
center of the capital markets ecosystem, we are able to serve as a bridge
between investors and corporates focused on enhancing the client experience
by providing efficient routes to capital, delivering more holistic, actionable
insights and intelligence, modernizing workflows, and navigating the climate
and ESG landscape. We offer a suite of products to assist companies in
managing corporate governance standards, discussed below in Workflow &
Insights.
Our Capital Access Platforms segment includes our Data & Listing Services,
Index and Workflow & Insights businesses.
Data & Listing Services
Our U.S. and European data products enhance transparency of market activity
within our exchanges and provide critical information to professional and non-
professional investors globally. Our Data business sells and distributes
historical and real-time market data to sell-side customers, the institutional
investing community, retail online brokers, proprietary trading firms, and
other venues, as well as internet portals and data distributors.
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 market participants and to data distributors who
in turn provide subscriptions for this information. Our systems enable
distributors to gain access to our market depth, 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 TotalView, 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 offer TotalView
products for our Nasdaq BX, Nasdaq PSX and Nordic markets. We also offer
Nordic Equity TotalView, Nordic Derivatives TotalView and Nordic Fixed
Income TotalView for 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 various other data, including data
relating to our U.S. equities and options exchanges and Nordic equities,
derivatives, fixed income, futures and commodities.
Additionally, our Nasdaq Cloud Data Service provides a flexible and efficient
method of delivery for real-time exchange data and other financial
information. Data
through a suite of application
programming interfaces, or APIs, allowing for the integration of data from
disparate sources and a reduction in time to market for customer-designed
applications. The API is highly scalable and can support the delivery of real-
time exchange data.
is made available
We operate a variety of listing platforms around the world to provide multiple
global capital raising solutions for public companies. Companies listed on our
markets represent a diverse array of industries including, among others,
healthcare, 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 may do so
on one of the three market tiers: The Nasdaq Global Select Market, The
Nasdaq Global Market, or The Nasdaq Capital Market. To qualify, companies
must meet minimum listing requirements, including specified financial and
corporate governance criteria. Once listed, companies must maintain rigorous
listing and corporate governance standards.
4
As of December 31, 2022, 379 ETPs listed on 26 exchanges in over 20
countries tracked a Nasdaq index and accounted for $315 billion in AUM.
This includes approximately $85 billion in ETP AUM, or 27% of the total
AUM that tracked our smart beta indexes during this same time period. Our
flagship index, the Nasdaq-100 Index, includes the top 100 non-financial
companies listed on The Nasdaq Stock Market, and is tracked by more than
100 ETPs worldwide, and had nearly $200 billion in assets tracking the index
as of December 31, 2022.
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 daily as well as historical weightings and
components data, corporate actions and a breadth of additional data for the
indexes that we operate.
Nasdaq Dorsey Wright, or NDW, provides passive indexing and smart beta
strategies to support the financial advisor community, as well as systematic
relative strength strategies to manage separately and unified managed
accounts. NDW strengthens Nasdaq’s position as a leading smart beta index
provider in the U.S.
Workflow & Insights
Our Workflow & Insights business includes our analytics and corporate
solutions businesses.
Our analytics business provides asset managers, investment consultants and
institutional asset owners with information and analytics to make data-driven
investment decisions, deploy their resources more productively, and provide
liquidity solutions for private funds. Through our eVestment and Solovis
solutions, we provide a suite of cloud-based solutions that help institutional
investors and consultants conduct pre-investment due diligence, and monitor
their portfolios post-investment. The eVestment platform also enables asset
managers to efficiently distribute information about their firms and funds to
asset owners and consultants worldwide.
As of December 31, 2022, a total of 4,230 companies listed securities on The
Nasdaq Stock Market, with 1,566 listings on The Nasdaq Global Select
Market, 1,298 on The Nasdaq Global Market and 1,366 on The Nasdaq
Capital Market.
We seek new listings from companies conducting IPOs, including SPACs, and
direct listings as well as companies looking to switch from alternative
exchanges. The 2022 new listings were comprised of the following:
IPOs
Switches from the New York Stock Exchange LLC, or NYSE,
and the NYSE American LLC, or NYSE American
Upgrades from OTC
ETPs and Other Listings
Total
The Nasdaq Stock Market IPO win rates:
2022 total
Operating companies
SPACs
161
14
46
145
366
89 %
92 %
86 %
During 2022, we had 14 new listings resulting from companies switching their
listings from NYSE or NYSE American to join The Nasdaq Stock Market.
Together with companies that transferred additional securities to The Nasdaq
Stock Market during 2022, an aggregate of $36 billion in global equity market
capitalization switched to The Nasdaq Stock Market.
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, 2022, a total of 1,251 companies listed
securities on our Nordic and Baltic exchanges.
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 2022, a total of 63 new companies listed on our Nordic and Baltic
exchanges. In addition, 12 companies upgraded their listings from Nasdaq
First North to Nasdaq Main Market.
Index
Our Index business develops and licenses Nasdaq-branded indexes and
financial products. 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.
5
Through the Solovis platform, endowments, foundations, pensions and family
offices transform how they collect and aggregate investment data, analyze
portfolio performance, model and predict future outcomes, and share
meaningful portfolio insights with key stakeholders. The Nasdaq Fund
Network and Nasdaq Data Link are additional platforms in our suite of
investment data analytics offerings and data management tools. Nasdaq Fund
Network gathers and distributes daily net asset values from over 35,000 funds
and other investment vehicles across North America. We have extended
Nasdaq Fund Network to support the distribution of collective investment
trusts, hedge funds, managed accounts, separate accounts and demand deposit
accounts. Nasdaq Data Link strengthens our position as a leading source for
financial, economic, and alternative datasets. For investment management
firms, investment banks and other investors, the platform powers data-driven
decision-making for users across the globe via universal APIs, and provides
for highly efficient data discovery and delivery.
Our corporate solutions business serves both public and private companies and
organizations
through our Investor Relations Intelligence, Governance
Solutions and ESG Solutions products. Our public company clients can be
companies listed on our exchanges or other U.S. and global exchanges. Our
private company clients include a diverse group of organizations ranging from
family-owned companies, government organizations, law firms, privately held
entities, and various non-profit organizations to hospitals and healthcare
systems. We help organizations enhance their ability to understand and expand
their global shareholder base, improve corporate governance, and navigate the
evolving ESG landscape through our suite of advanced technology, analytics,
and consulting services. We also advise clients on a range of governance and
sustainability-related issues.
Our Investor Relations Intelligence offerings include a global team of expert
consultants that deliver advisory services including Equity Surveillance &
Shareholder Analysis, Investor Engagement and Perception Studies, as well as
an industry-leading platform, Nasdaq IR Insight®, to investor relations
professionals and executive teams. These solutions allow investor relations
officers and executives to better manage their investor relations programs,
understand their investor base, target new investors, manage meetings and
consume key data such as investor profiles, equity research, consensus
estimates and news.
Through our Governance Solutions products, we provide a global technology
offering and consulting services that streamline the meeting process for board
of directors and executive leadership teams and enable them to accelerate
decision making and strengthen governance. Our solutions help protect
sensitive data and facilitate productive collaboration, which enables board
members and teams to work faster and more effectively.
Our ESG Solutions includes our ESG Advisory practice and our ESG software
offering. Our ESG Advisory practice helps companies analyze, assess and
action best practices to attract long-term capital. Our ESG Software offering
includes OneReport, a SaaS solution, that helps organizations navigate
corporate responsibility frameworks, manage
information capture and
response process, and deliver ESG data to ratings agencies and other
stakeholders. In June 2022, we acquired Metrio Software Inc., or Metrio, a
cloud-based solution that helps firms manage ESG data, perform greenhouse
gas emissions calculations and accounting, and optimize granular data
collection, report publication and dashboarding against targets. Both solutions
support audit and assurance requirements.
Anti-Financial Crime
Our Anti-Financial Crime segment delivers leading platforms that improve the
integrity and transparency of the financial world by providing SaaS solutions
for fraud detection, anti-money laundering, and trade and market surveillance.
The financial services industry has seen a growing demand for products and
services focused on anti-financial crime. Our FRAML solution provides a
cloud-based platform to help detect, investigate, and report money laundering
and financial fraud to more than 2,300 financial institutions in North America.
Our surveillance solutions include a SaaS platform designed for banks,
brokers and other market participants to assist in complying with market rules,
regulations and internal market surveillance policies and serves more than 170
clients. We also provide a solution to regulators and exchanges with a robust
platform to manage cross-market, cross-asset and multi-venue surveillance.
This offering powers surveillance for more than 50 exchanges and 15
regulators.
In 2022, we expanded our anti-financial crime technology with new
capabilities and coverage for the digital assets ecosystem, allowing us to play
a central role in combating the rising threat of fraud, money laundering and
market manipulation across the digital assets landscape.
Enablers, Differentiators and Competition
Technology
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 identifying areas for improvement
in systems, and 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
through training, targeted phishing education 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.
6
Nasdaq's shift to utilizing and deploying cloud infrastructure continued during
2022. In the fourth quarter of 2022, we migrated Nasdaq MRX to the cloud,
which is the first exchange moved to an exclusively cloud-enabled
infrastructure and the first exchange solely in the cloud of any regulated public
market in the world. We believe that migrating our exchanges to the cloud,
through our partnership with AWS, our preferred cloud provider, will result in
improved performance and increased flexibility for our customers. We expect
to move additional North American markets to the cloud with AWS during the
next several years. The shift to cloud-based markets will enable Nasdaq to
provide its clients access to cloud-based capabilities, including virtual
connectivity services, market analytics and machine learning, at a lower cost.
We also expect to leverage the cloud-based infrastructure for our market
technology clients, assisting such clients in developing their own platforms
and customizing their offerings for their local, rapidly changing industry
dynamics.
To facilitate the exchange migration to AWS, Nasdaq will also leverage its
Fusion technology platform. Fusion positions Nasdaq’s North American and
European markets to manage, operate and deploy a common platform that can
be used across our nine Nasdaq derivative markets, while enabling our
markets for cloud deployment.
We continue to utilize NFF for delivering end-to-end solutions to market
infrastructure operators, buy-side firms, sell-side firms and other non-financial
markets in addition to also supporting Nasdaq's own internal trading systems.
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, central securities depositories,
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, NFF enables end users to
leverage recent technology developments.
Competitive Strengths
We are a global, client-focused technology company with expertise in
markets. We deploy robust technology capabilities and have developed a
leading anti-financial crime and corporate and investor franchise. Our business
segments complement each other and we believe that our strong competitive
position in large, high-growth markets positions us for sustained growth.
A Unique Value Proposition
We operate leading platforms that can improve the liquidity, transparency, and
integrity of the global economy, allowing us to:
• Develop efficient and reliable technologies to facilitate and protect the
financial system across asset classes;
• Empower our clients to effectively navigate the capital markets, achieve
their sustainability goals, and maintain corporate governance excellence;
and
• Provide data, tools and insights that drive sound decision making.
Technological Strength
The strength and resiliency of our technology, enhanced by our Marketplace
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 Across the Global Financial Ecosystem
We strive to serve a diverse range of clients that participate across the global
financial ecosystem, including:
• Brokers and Traders - Helping brokers and traders to confidently plan,
optimize and execute their business vision.
• Market Participants - Providing market participants with access to
liquidity and enabling them to efficiently consume, monitor, analyze, and
capitalize on real-time market changes.
• Listed Companies - Enabling companies to access capital markets
effectively and manage stakeholders.
• Investors and Asset Managers - Offering products and services to assist
investors and asset managers in optimizing their portfolios and offerings.
• Market Infrastructure Operators - Assisting market infrastructure
operators in increasing efficiency, meeting customer needs, and growing
revenue.
• Banks and Financial Institutions - Providing safety and integrity through
a suite of trade surveillance and cloud-native anti-financial crime solutions.
Competition
Market Platforms
We face intense competition in North America and Europe for our Trading
Services businesses. We seek to provide market participants with greater
functionality, trading system stability and performance, 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.
7
Traditionally, exchanges and exchange-related businesses would internally
develop technology, sometimes aided by consultants. However, this model has
gradually 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 business: exchange
operators and technology providers unaffiliated with exchanges. These
organizations make available a range of off-the-shelf technology, including
trading, clearing, settlement, depository and information dissemination, and
offer customization and operation expertise. Market conditions in market
technology are evolving rapidly, which makes continuous investment and
innovation a necessity. Our partnership with AWS enables us to compete with
other companies that are developing cloud-based exchanges and market
technology offerings.
Capital Access Platforms
Our Data business includes proprietary data products. Proprietary data
products are made up exclusively of data derived from each exchange’s
systems. 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 is under competitive threat globally
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.
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 our 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. Additionally, we face
competition from private equity firms that may elect to keep their portfolio
companies as private companies.
In the U.S., our options markets compete with exchanges operated by Cboe
Global Markets, Inc., or Cboe, Miami International Holdings, Inc., or MIAX,
Intercontinental Exchange, Inc., or ICE, and BOX Options Market. In cash
equities in the U.S., we compete with exchanges operated by Cboe, ICE,
MIAX, The Investors Exchange, Members Exchange and Long Term Stock
Exchange. We also face competition from ATSs, known as “dark pools,” and
other less-heavily regulated broker-owned trade facilitation systems, as well as
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.
Our U.S. Tape plans earn revenue from consolidated data products which 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. 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.
In Europe, our cash equities markets compete with exchanges such as
Euronext N.V., Deutsche Börse AG, London Stock Exchange Group plc, or
LSE, and many MTFs such as Cboe, Turquoise and Aquis. Our competitors in
the trading and clearing of options and futures on European equities include
Eurex, Cboe, ICE Futures Europe and London Clearing House, or LCH. In
addition, in equities markets in Europe, we face competition from other
broker-owned systems, dark pools, Systematic Internalizers, or SIs, and 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 has resulted in further
competitive pressure on our European trading business. SIs are attracting a
significant share of electronically matched volume and compete aggressively
for the trading of equity securities listed on our Nordic exchanges. Different
bilateral trading systems pursuing block business also remain active in
Europe. Regulators are continuously monitoring the market structure and
have, in a series of consultations, asked for input regarding suggested changes
to MiFID II.
Our European fixed income and commodities products and services are subject
to competitive pressure from European exchanges and clearinghouses.
Our Marketplace Technology business includes our trade management
services and market technology businesses. Our trade management services
business competes with other exchange operators, extranet providers, and data
center providers.
8
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
AG. 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.
Our Index business offers Nasdaq-branded indexes and financial products and
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, including S&P Dow Jones Indices,
MSCI and FTSE Russell.
Workflow & Insights
includes our analytics and corporate solutions
businesses. Our analytics business faces competition from a broad array of
data and analytics suppliers, both established firms and small start-ups. Our
primary competitors are Morningstar, FactSet and any number of smaller
firms along with start-up data providers and aggregators. Our analytics
business offerings compete with other analytics providers, including Addepar
and Caissa.
Our corporate solutions business faces competition that can be varied and
fragmented. For our Investor Relations Intelligence solutions, 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. Our ESG Solutions, including
Nasdaq OneReport, Metrio and ESG Advisory, are positioned in evolving
markets with competitors offering multiple point solutions providing software,
data or consulting services. The competitive landscape for our Governance
Solutions products varies by customer segment and geography. Most
competitors offer SaaS solutions that are supported by a data centered strategy,
while certain firms offer specialized services that focus on a single niche
segment. Customers frequently seek single-source providers that are able to
address a broad range of needs within a single platform.
Anti-Financial Crime
For our Anti-Financial Crime segment, which includes solutions for fraud
detection, anti-money laundering or AML and trade and market surveillance,
competitors include core banking solution providers ranging from small to
large independent solution providers, FinTech start-ups and in-house custom
builds. We compete against enterprise solution providers and point solutions
for clients with larger AUM. Competitors also include companies that serve
multiple industries in addition to financial services with generalized solutions,
such as business intelligence tools, data integrators, investigation platforms
and software covering the boarder compliance lifecycle. Recently, there has
been an increase of FinTech start-ups shifting into the surveillance, fraud
detection and AML space offering highly-specialized solutions for advanced
data analytics, artificial intelligence and machine learning technology. The
anti-financial crime and surveillance offerings compete on a number of
factors, including but not limited to, increased workflow efficiency, quality of
the data, quality of alerts and pricing.
Our surveillance and anti-financial crime offerings must demonstrate the
ability to decrease false-positives and provide in-depth views into potential
abuses and risks that stem from those cases. These offerings help firms reduce
both the reputational and regulatory risk as well as the complexity in efforts to
keep markets and financial institutions safe.
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 various
kinds and contractual provisions. We enter into 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.
9
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 Program
We operate a corporate venture program to make minority investments
primarily in emerging growth FinTech companies that are strategically
relevant to, and aligned with, Nasdaq. Investments are made through the
venture program to further our 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. Since its inception in 2017, our venture program has grown in size
and has invested in companies covering various sectors, including data,
analytics and workflow, digital assets, market infrastructure, anti-financial
crime, new marketplaces, enabling technologies and ESG. As of December
31, 2022, our investments, which include equity and debt investments, were
valued at $180 million.
Environmental, Social and Governance Matters
Nasdaq is committed to further advancing our longer-term ESG strategy,
advocacy and oversight. We continue to engage with internal and external
stakeholders at all levels on ESG matters. During 2022, we deepened our
corporate and community ESG efforts, including furthering our commitment
to greater sustainability and climate change awareness.
The Nominating & ESG Committee has formal responsibility and oversight
for ESG policies and programs and receives regular reporting on key ESG
matters and initiatives. Our Corporate ESG Steering Committee serves as the
central coordinating body for our ESG strategy; it is co-chaired by executive
leaders and comprised of geographically diverse representatives from multiple
business units.
We continued to be committed to carbon neutrality, and for the fifth
consecutive year, achieved that goal across all business operations through the
purchase of green power, carbon offsets, and renewable energy certificates.
We were named to the Dow Jones Sustainability North America Index for the
seventh consecutive year and received recognition from the Bloomberg
Gender-Equity Index and The Human Rights Campaign’s Corporate Equality
Index. In addition, Nasdaq’s ESG scores improved across multiple rating
agencies during 2022, including four significant sustainability rating upgrades:
• MSCI: a two-tier rating increase to “AA,” from our “BBB” rating in the
prior year, placing Nasdaq in MSCI’s “Leaders” category.
• CDP: a score improvement to an “A” from the prior year’s “B”, earning us a
place on CDP’s “A List” for climate disclosures and actions.
• EcoVadis: status upgrade to “Gold Medal,” a recognition reserved for the
top 5% of all rated companies, as compared to our “Silver Medal” status in
the prior year.
• 2022 S&P Corporate Sustainability Assessment (CSA): a score of 60,
representing an 20% year-over-year score increase, placing Nasdaq in the
95th percentile of our industry group.
In 2022, Nasdaq also continued to be a signatory to the United Nations Global
Compact and the United Nations Principles of Responsible Investment and
became a signatory to the World Economic Forum Stakeholder Capitalism
Metrics.
While our business operations account
for a comparatively small
environmental impact, we focus our environmental efforts on several key
areas, including the way we use energy resources, manage our workspaces,
engage our value chain and conduct business travel. Through these efforts, we
seek to lessen the environmental impact of our organization by reducing
atmospheric carbon emissions and managing water and waste associated with
business operations. Nasdaq has approved near-term and long-term science-
based emissions reduction targets with the Science Based Targets initiative, or
SBTi. In 2022, the SBTi verified Nasdaq’s 2050 net-zero science-based target.
th
Nasdaq has obtained the LEED Platinum certification for our New York
headquarters office in Times Square, which complements the LEED Gold
certification for our 10 Floor Client Experience Center, our space for client
events in our New York headquarters. We also achieved LEED Gold
certifications for our new Greensboro, North Carolina office and existing
office locations in Copenhagen, Reykjavik, San Francisco, Stockholm, Umeå,
Vilnius and Washington, D.C. We continue to look for additional opportunities
to transition to green offices across the globe as part of our strategy to reduce
office operation-related emissions.
We help companies of all ESG maturity levels through our robust combination
of technology, tools, data, insights and capital market solutions. During 2022,
we maintained, and continued to expand, our portfolio of ESG services and
solutions for our clients and stakeholders, including:
• the Nasdaq ESG Advisory Program, which pairs companies with ESG
consulting expertise to help them analyze, assess and enact ESG program
best practices with the goals of attracting long-term capital and enhancing
value;
• the Nasdaq OneReport platform, which helps clients streamline the data
gathering process under various frameworks for sustainability reporting and
provides data to ratings agencies;
10
• the Metrio platform, which provides tools to address corporate issuers’
Regulation
expanding ESG data collection, analytics, and reporting needs;
We are subject to extensive regulation in the U.S., Canada and Europe.
• the Nasdaq Sustainable Bond Network, which connects issuers and
investors in sustainable, green and social bonds, and provides access to
detailed information and impact data, allowing investors to make more
informed decisions;
• the Nasdaq ESG Data Hub, which connects investors with expert led ESG
data sets from leading providers across a wide spectrum of areas, including
gender diversity, carbon emissions and climate risk, providing detailed and
tangible intelligence on companies’ ESG profiles;
• the Nasdaq ESG Data Portal, which now includes ESG-related data from
more than 630 Nordic companies;
• the Nasdaq ESG Footprint, a tool that helps both institutional and retail
investors analyze the impact of their portfolios;
• the eVestment ESG Questionnaire, which provides a standard approach to
ESG reporting thereby allowing for greater transparency into how ESG
strategies work, providing deeper ESG data for allocator consumption, and
enabling asset managers to better articulate their approach to ESG; and
• Puro.earth, a leading marketplace for carbon removal, which we believe will
address the growing demand for carbon removal by corporations, as well as
enable new carbon removal methodologies as technologies evolve.
In 2022, we requested our existing leading suppliers by spend to attest to our
updated Supplier Code of Ethics. The Supplier Code of Ethics, which is
available on our website, encourages our suppliers and vendors to adopt
sustainability and environmental practices in line with our published
Environmental Practices Statement, to promote a diverse and inclusive
workforce and to engage diverse-owned business in their supply chain.
Additionally, our new suppliers are required to attest to the Supplier Code of
Ethics in connection with the commencement of their engagement.
Effective August 8, 2022, Nasdaq’s new listing rule requires companies listed
on our U.S. exchange to publicly disclose consistent, transparent diversity
statistics regarding their board of directors using a standardized template.
Companies are also required to choose whether to meet recommended board
diversity objectives or disclose their reasons for not doing so under new listing
rules effective in 2023, 2025 and 2026 (depending on the company’s listing
tier and board size). The diversity rules are currently being challenged by two
advocacy groups in the U.S. Court of Appeals for the Fifth Circuit.
For more information regarding our ESG efforts in 2022, both internally and
externally, please see the section entitled “Human Capital Management”
below and our Proxy Statement.
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:
National Securities Exchanges. SROs in the securities industry are an essential
component of the regulatory scheme of the Exchange Act responsible 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 of which operates an options market under its own
SRO license. As SROs, each entity has separate rules pertaining to its broker-
dealer members and listed companies, as applicable. 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, operating results and
financial condition.
11
revisions
including
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,
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, after 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.
Nasdaq conducts real-time market monitoring, certain equity surveillance not
involving cross-market activity, most options surveillance, rulemaking,
enforcement and 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. Pursuant to regulatory services
agreements between FINRA and our SROs, FINRA provides certain
regulatory services to our markets, including some regulation of trading
activity and surveillance and investigative functions. In 2019, Nasdaq received
SEC approval to reclaim from FINRA the responsibility and opportunity to
bring enforcement actions against member firms for violating certain Nasdaq
exchange rules governing conduct on the Nasdaq exchanges. 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 seeking to list their securities on The Nasdaq
Stock Market to determine whether the quantitative and 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.
Broker-dealer regulation. Nasdaq’s broker-dealer subsidiaries are subject to
regulation by the SEC, the SROs and various state securities regulators.
Nasdaq operates three broker-dealers: Nasdaq Execution Services, LLC,
NFSTX, 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. In addition,
we own a minority interest in NPM Securities.
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. NFSTX is a registered ATS and acts as an intermediary to facilitate
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. Nasdaq
Capital Markets Advisory acts as a third-party advisor to privately-held or
publicly-traded companies during IPOs and various other offerings.
The SEC, FINRA and SROs adopt, and require strict compliance with, rules
and regulations applicable to broker-dealers. 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 Designated Examining Authority.
The Designated Examining Authority is responsible for examining a broker-
dealer for compliance with the SEC’s financial responsibility rules. FINRA is
the current Designated Examining Authority for each of our broker-dealer
subsidiaries.
Our registered broker-dealers are subject to 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,
2022, 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, we have reduced the scope of services provided
by FINRA under these regulatory services agreements and are performing
certain of those regulatory functions directly. In addition, 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;
12
• 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 Intermarket Linkage
Plan require that exchanges avoid 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.
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 for a two-year term
through October 2023. The Nasdaq Stock Market also serves as the
administrator for the UTP Plan. To fulfill its obligations as the processor, The
Nasdaq Stock Market has designed, implemented, maintained, and operated a
data processing and communications system, hardware, 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.
In May 2020, the SEC adopted an order to require changes to the governance
of securities information processors. In June 2020, we and several other
exchanges petitioned the U.S. Court of Appeals for the District of Columbia
Circuit, or the Court of Appeals, to review the SEC’s governance order. In
July 2022, the Court of Appeals vacated portions of the governance order that
would have provided voting rights to persons other than SROs. At this time,
the SEC has not directed implementation of the remaining portions of the
governance order, but may do so in the future.
In December 2020, the SEC adopted a rule to modify the infrastructure for the
collection, consolidation and dissemination of market data for exchange-listed
national market stocks, or NMS data. The rule changes include, among other
things, requiring exchanges to add more “core data” to the securities
information processors, including partial depth-of-book, certain odd-lot
quotations/transactions, auction,
regulatory, and administrative data;
eliminating central, official consolidators of tape plans and enabling multiple
competing consolidators to register to aggregate and disseminate core data;
and authorizing persons to purchase and aggregate core data directly from the
exchanges for their own use. In May 2022, the Court of Appeals rejected a
challenge to the rule brought by Nasdaq and several other exchanges. In
September 2022, the SEC disapproved fees proposed by Nasdaq and other
exchanges to implement the rule but did not direct exchanges to take further
action to implement the rule. Accordingly, a schedule for implementing the
rule has not been imposed by the SEC, and we are not certain of the timing, or
the impact, of these new rules on our business or role as a securities
information processor.
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 compliance obligations, with the goals of reducing the occurrence of
technical issues that disrupt the securities markets and improving recovery
time when disruptions occur. We implemented an inter-disciplinary program
to ensure compliance with Regulation SCI. We have also created Regulation
SCI policies and procedures, updated internal policies and procedures, and
developed an
to ensure
compliance.
technology governance program
information
Regulation of Registered Investment Advisor Subsidiary. Our subsidiary NDW
is an investment advisor registered with the SEC under the Investment
Advisors Act of 1940. In this capacity, NDW is subject to oversight and
inspections by the SEC. Among other things, registered investment advisors
like NDW 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.
13
CFTC Regulation. The Dodd-Frank Wall Street Reform and Consumer
Protection Act 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.
In addition, proposed rules under MiFID II and MiFIR rules are expected to
include provisions for the establishment of a European consolidated tape of
pre- and/or post-trade data. These rules may affect our ability to offer market
data products in the same manner as we currently provide such offerings.
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.
While exempt from exchange recognition in each jurisdiction in Canada other
than Ontario where Nasdaq Canada carries on business, Nasdaq must also
comply with the terms and conditions of an exemption order granted by the
other jurisdictions in order to maintain its exemptive status. Oversight of the
exchange is performed by Nasdaq Canada’s lead regulator, the Ontario
Securities Commission.
Nasdaq Canada is subject to several national marketplace related instruments
which set out requirements 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.
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, did not need
to be in compliance with the Benchmark Regulation until January 1, 2020 in
relation to benchmarks provided by Nasdaq’s European subsidiaries, or until
January 1, 2026, in relation to benchmarks provided by non-European Nasdaq
entities. As the regulatory environment continues to evolve and related
opportunities arise, we intend to continue developing our products and
services to ensure that the exchanges and clearinghouse 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 of 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 prompt, 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.
14
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 their obligation
to submit regular financial information to relevant authorities.
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
supervisory authorities in Sweden, 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. In 2019, the supervisory authority in Norway
joined this cooperation.
Nasdaq owns a central securities depository known as Nasdaq CSD SE
(Societas Europaea)¸ that provides notary, settlement, central maintenance and
other services in the Baltic countries and in Iceland. Nasdaq CSD SE is
licensed under the European Central Securities Depositories Regulation and is
supervised by the respective regulatory institutions.
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 (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 Financial Supervisory
Authority of Norway supervises the Norwegian exchange on an autonomous
basis and the Norwegian exchange also has a separate market surveillance
function overseen by the Financial Supervisory Authority.
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 in Stockholm. In addition, there are designated
personnel who carry out surveillance activities at Nasdaq Oslo and the three
Baltic
exchanges. In Finland, Sweden and Estonia, decisions to list new companies
on the main market are made by listing committees that have external
members in addition to members from each respective exchange and in the
other countries the decision is made either by the respective president of the
exchange or by the executive board.
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, Sweden and Norway. Suspected
insider trading is reported to the appropriate authorities in the respective
country.
In the United Kingdom, The Nasdaq Stock Market, Nasdaq Oslo ASA,
Nasdaq Stockholm AB, Nasdaq Copenhagen A/S, and Nasdaq Helsinki Ltd
are each subject to regulation by the Financial Conduct Authority as
“Recognised Overseas Investment Exchanges.” Nasdaq Clearing is registered
as a recognized third country CCP with the Bank of England under the
temporary recognition regime. The registration became effective on December
31, 2020, and lasts for four years. We have submitted our application for
permanent recognition.
Human Capital Management
Nasdaq has continued to strengthen our commitment to, and investment in,
attracting, retaining, developing and motivating our employees during 2022.
In 2022, we introduced the Nasdaq Culture Book, which consolidates and
explains Nasdaq’s culture, including Nasdaq’s vision and purpose; our values;
and behavioral attributes that we believe successful employees at Nasdaq
share. We believe that being clear and descriptive regarding our culture
energizes and helps align employees, and also enables us to allow prospective
employment candidates to better understand the organization they are
considering joining.
We also continued to bolster our efforts to create a diverse and inclusive work
environment of equal opportunity, where employees feel respected and valued
for
its employees have
opportunities to make positive contributions to our local communities. See
“Diversity, Equity and Inclusion” below for further discussion of these efforts.
their contributions, and where Nasdaq and
As of December 31, 2022, Nasdaq had 6,377 full and part-time employees,
including employees of non-wholly owned consolidated subsidiaries.
15
Employee Safety
We are committed to ensuring the safety and well-being of our employees and
stakeholders, and complying with local government regulations in the areas in
which we operate. Our employees may work from our offices or work from
home, with most of our employees continuing to utilize a hybrid work
schedule of both working in an office and remotely during each week.
Talent Management and Development
We continued to increase our efforts in attracting and retaining our employees.
Nasdaq seeks to hire world-class, innovative, and diverse talent across the
globe.
Our internal employee engagement score, based on our biannual employee
engagement surveys, increased year-over-year from 2021. Our workforce
voluntary attrition rate during 2022 was approximately 11%, which was
comparable to 2021.
Our Talent Attraction Team focused on strategic marketing and branding to
position Nasdaq as a leading employer of choice for talent in our industry,
helping to increase our pool of top candidates for open positions, particularly
diverse candidates. We ran targeted attraction campaigns in our major markets
using (with permission) local employee stories and photos, and partnered with
diverse talent organizations, such as the National Society of Black Engineers,
AfroTech, the Society of Women Engineers, Women in Technology, Grace
Hopper and the Society of Hispanic Professional Engineers to help improve
brand awareness of Nasdaq and attract a higher number of diverse candidates
compared to 2021.
During 2022, we launched a year-long series called the Manager Forum,
facilitated by our CEO and other senior and mid-career leaders, to engage
managers in sustained leadership development, alongside our existing formal
leadership development curriculum.
We also launched a new artificial intelligence-driven career development
platform called the Career Hub that matches employees, based on their career
aspirations, to internal training, potential mentors, short-term projects and full-
time internal roles. This helped us increase our career satisfaction scores in
our biannual employee engagement survey and supported employee retention.
We have invested in professional development for our employees, including
offering access to more than 26,000 professional development programs;
providing tuition assistance to employees enrolled in degree-granting
academic programs; holding internal career fairs and career development
programs; connecting employees to our formal mentoring programs and
providing one-on-one professional coaching opportunities. We welcomed 156
interns to Nasdaq during 2022.
To reward our employees at various stages of their tenure with Nasdaq, we
continued our anniversary recognition program that includes Nasdaq-branded
merchandise, and, for major milestones, recognition on our Nasdaq Tower in
Times Square. Additionally, our peer-to-peer employee recognition program
rewards employees and highlights recognized employees on our internal social
media channels, further amplifying the recognition.
Diversity, Equity and Inclusion
At Nasdaq, three pillars guide our diversity, equity and inclusion efforts:
Workforce, Workplace and Marketplace. Workforce seeks to ensure that our
employee population is representative of the communities in which we
operate. Workplace seeks to create a positive, equitable workplace experience
for all employees of Nasdaq, and Marketplace aims to positively influence our
peers in the capital market ecosystem, and to invest in our local communities
in which we operate.
Nasdaq sponsors eleven employee-led internal affinity networks. These
networks include more than 2,400 employee members, representing 37% of
our employees and contractors. Nasdaq’s Employee Networks support the
diverse communities that comprise our workforce, including Black, Asian
American, Hispanic, LGBTQ+,
and
parent/caregiver communities. Nasdaq’s Employee Networks provide both
formal and informal development programs and guidance for their members.
The networks benefit the entire Nasdaq workforce through educational events,
guest speakers, and volunteering opportunities.
disabled,
veteran,
female,
Nasdaq regularly and proactively reviews and monitors diversity data across
its businesses, including workforce composition, talent pipeline, and sentiment
by business unit. In 2022, we offered two diversity trainings, “Conscious
Inclusion” and “Inclusive Leadership,” for non-managers and managers,
respectively. All of our executives completed this course, increasing
understanding of diversity and equity priorities at the highest level. We also
added customized developmental programs for underrepresented talent,
including executive mentoring and accelerated leadership development
programs. In 2022, we launched a high-potential leadership program for our
female employees
increase advancement
opportunities.
their skills and
to enhance
We continue to seek to improve our diversity metrics, both through
development of our internal talent pool and by focusing on interviewing
diverse candidates externally for new employment opportunities. During our
annual executive succession planning exercise with our Board of Directors,
we realized a 26% increase, as compared to 2021, in the diversity of our senior
executive succession candidates (considering gender, race and LGBTQ+
status) due to a focus by our senior executives on identifying and cultivating
talent deeper in their organizations. As a signatory to the Parity Pledge, we
fulfilled our commitment to interview female candidates for all externally
advertised roles at the Vice President level and above.
16
Additionally, Nasdaq has been named to the Human Rights Campaign
Corporate Equality Index, Coqual Black Equity Index, and several Seramount
indexes, including 100 Best Companies and Best Companies for Dads. We
were also named to the Bloomberg Gender Equality Index again in 2022.
Workplace Demographics
During 2022, we continued our progress to increase the diversity of our global
workforce. Our global female employee base increased from 2021 and has
grown each year since 2019, and in the United States, our minority employee
base also grew, continuing a trend since 2019. Nasdaq has increased our
underrepresented minority representation
includes
Black/African American, Hispanic/Latino, Multiracial, Native American,
Native Hawaiian, and Pacific Islander employees, from 14.9% in 2019 to
16.8% in 2022.
the U.S., which
in
Gender and Ethnicity Performance Data as of December 31, 2022 and
2021
Gender:
17
Our Total Rewards program extends beyond compensation, offering a suite of
programs, benefits, perquisites and resources to support employee priorities.
In addition to cash and equity compensation, we also offer employee benefits
such as health (medical, dental, vision and telehealth) insurance, fertility
benefits, paid time off, paid parental leave, adoption assistance, an employee
stock purchase plan, student loan repayment benefits, charitable contribution
matching and a U.S. 401(k) plan with company matching. In response to the
pandemic we introduced, and have continued to offer, additional benefits to
support our employees, including caregiver support, back-up childcare, “flex
days” (extra time off in addition to vacation), and hybrid work schedules,
allowing our employees to focus on mental well-being.
Community Involvement
We are committed to creating lasting, positive change within our Company
and the communities we serve. Our employees take pride in being active in
our communities. Through our Nasdaq GoodWorks Corporate Responsibility
Program, we have committed to supporting the communities in which we live
and work by providing eligible full and part-time employees two paid days off
per year to volunteer. We also match charitable donations of all Nasdaq
employees and contractors up to $1,000, or more in certain circumstances, per
calendar year. In 2022, Nasdaq employees raised over $1 million including
donations and matches, supporting almost 650 charities worldwide.
Nasdaq’s “Purpose” comprises our philanthropic, community outreach,
entrepreneurial support and employee volunteerism programs, all designed to
leverage our unique place at the center of capital creation, markets, and
technology and drive stronger economies, more equitable opportunities and
contribute to a more sustainable world.
During 2022, Nasdaq held two Purpose roundtables, which convened
corporate peers from companies at the forefront of these issues, sharing
insights on the importance of purpose in their organization, and how it is
embedded and communicated within their company and among stakeholders
to drive impact.
Nasdaq also held its second annual “Purpose Week” to further champion
economic progress for all, which included a series of company-wide webinars,
volunteer opportunities, an innovation challenge and other events involving
and recognizing company employees. In addition to those events, we launched
a set of digital campaigns, accompanied by virtual conversations, spotlighting
several of the Nasdaq Foundation’s community partners. These discussions
explored
for
underrepresented communities and innovative approaches needed to tackle
investor identity as one of the overlooked barriers to partaking in the capital
markets.
topics such as creating a stronger
investor
identity
18
* In the charts above, not disclosed percentage includes employees that have
chosen not to disclose and race and ethnicities that are less than 0.3%.
In 2022, we conducted a pay equity analysis, which supplements our annual
multifaceted compensation review program, successfully concluding that
review in the second quarter of the year. Our pay equity analysis for 2023 has
already begun as part of the annual compensation review program to be
completed in the same cycle next year.
Finally, to increase transparency of our workforce, Nasdaq publishes statistics
on the composition of its own global workforce by gender, and of its U.S.
workforce by gender, race and ethnicity, in our U.S. EEO-1 report and our
Sustainability Report, which are available on our website.
Compensation and Benefits
Our Total Rewards compensation program is designed to attract, retain, and
empower employees to successfully execute our growth strategy. Our
comprehensive Total Rewards program reflects our commitment to protecting
our employees’ health, well-being and financial security.
Our talented employees are our greatest asset, and we offer competitive
compensation to attract and retain the best employees. Our pay-for-
performance compensation programs
includes market-competitive base
salaries, annual bonuses or sales commissions, and equity grants. The majority
of our employees are granted annual, long-term equity awards, enabling them
to be owners of the company, committed to our long-term success and
aligning their interests with the short-term and long-term interests of our
shareholders.
The mission of the Nasdaq Foundation is focused on two primary goals:
reimagining investor engagement to equip under-represented communities
with the financial knowledge to share in the wealth that markets create; and
leveraging our investment in the Nasdaq Entrepreneurial Center alongside
new strategic partnerships with organizations that can help build a deeper,
data-led understanding of where the challenges are greatest, what existing
efforts could be amplified, and how the Nasdaq Foundation can make new and
distinctive contributions.
During 2022, the Nasdaq Foundation provided 14 grants to organizations that
seek to fulfill that mission. These grants were awarded to, among others,
Black Girl Ventures, an ecosystem of Black/Brown woman-identifying
leaders, assisting them through the early-stages of entrepreneurship; Change
Labs, a community-led organization providing access to capital and resources
to the next generation of Native American change makers; and Hispanic
Access Foundation, which provides financial and investment training to
Spanish-speaking Latinos.
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 regarding issuers that file electronically with
the SEC. The address of that site is www.sec.gov.
Our website is http://ir.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
our website and click on “Financials” then 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.
RISKS RELATED TO OUR BUSINESS AND INDUSTRY
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, current or expected inflation, interest rate
fluctuations, market volatility, changes in investment patterns and priorities,
pandemics (such as COVID-19) 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 may 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, FRAML solutions, data, indexes and corporate solutions, or could
result in a decline in the number of IPOs, reduced trading volumes or values
and deterioration of the economic welfare of our listed companies, which
could cause an increase in delistings.
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 Platforms 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, or reduce the number of issuers launching IPOs, including SPACs,
and direct listings. The number of IPOs on our exchanges decreased in 2022
and the number of delistings increased compared to 2021.
Our Capital Access Platforms 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 or if our
customers consolidate, which could result in significant reductions in our
professional user revenue or expose us to increased risks relating to
dependence on a smaller number of customers. In addition, adverse market
conditions may cause reductions in the number of non-professional investors
with investments in the market and in ETP AUM tracking Nasdaq indexes as
well as trading in futures linked to Nasdaq indexes.
19
There may be less demand for our corporate solutions, market technology and
FRAML products and services if global economic conditions remain weak.
Our customers historically reduce purchases of new services and technology
when growth rates decline, thereby diminishing our opportunities to sell new
products and services or upgrade existing products and services.
Additionally, during a global economic downturn, or periods of economic,
political or regulatory uncertainty, our sales cycle may become longer or more
unpredictable due to customer budget constraints or unplanned administrative
delays to approve purchases
A reduction in trading volumes or values, market share of trading, the number
of our listed companies, or demand for market technology or Capital Access
Platforms 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 Platforms, Capital Access
Platforms and Anti-Financial Crime 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. In addition, competitors recently
have launched new exchanges in the U.S., including an exchange established
by a group of 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 make their trading, listings, clearing, data or technology businesses
more competitive than ours.
We face intense price competition in all areas of our business. In particular, the
trading industry is characterized by 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, or due to new SEC
regulations, 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.
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. We could experience a systems
failure due to human error by our employees, contractors or vendors, electrical
or telecommunications failures or disruptions, hardware or software failures or
defects, cyberattacks, sabotage or similar unexpected events. These
consequences could result in service outages, lower trading volumes or values,
financial losses, decreased customer satisfaction, litigation 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, and leverage third party cloud providers, 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.
20
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, such as our
digital assets offering, initiatives and enhancements to existing products. If
these products and initiatives are not successful or their launches are delayed,
including for regulatory uncertainty related to our digital assets offering, 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, including cloud-based infrastructure for certain
of our offerings. 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. We may allocate significant
amounts of cash and other resources to product technologies or business
models for which market demand is lower than anticipated. In addition, the
introduction of new products by competitors, the emergence of new industry
standards or the development of entirely new technologies to replace existing
product offerings could render our existing or future products obsolete.
A decline 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. Beginning in 2020, trading and
clearing volumes and values across our markets have fluctuated significantly
depending on market conditions and other factors beyond our control. 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 and depository 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, or recently adopted SEC rules and
regulations, could lower The Nasdaq Stock Market’s share of tape pool
revenues under the consolidated data plans, thereby reducing the revenues of
our U.S. Tape plans business.
Our role in the global marketplace positions us at greater risk for a
cyberattack.
Our systems and operations are vulnerable to damage or interruption from
security breaches. As a result of our adoption of a hybrid work environment,
we have a broader and more distributed network footprint and increased
reliance on the home networks of employees, and such remote work may
cause heightened cybersecurity and operational risks. 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 of human error or
malicious activity and criminal organizations may seek to profit from stolen
data. Computer malware, such as 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 and invest additional 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, or due to a cybersecurity breach of a customer that results in a
loss of our data or compromises our systems or those of our other customers
utilizing the same products, could damage our reputation and result in: a loss
of customers; disrupted customer relationships; the loss of our intellectual
property or sensitive data; lower trading volumes
21
or values, incur significant liabilities or otherwise have a negative impact on
our business, our products and services, financial condition and operating
results. Further, cybersecurity incidents that impact our vendors and other
third parties that support our organization and industry could directly or
indirectly impact us. There can be no assurance we will be able to identify and
mitigate every incident involving cybersecurity attacks, breaches or incidents.
A system breach may go undetected for an extended period of time.
cybersecurity
cybersecurity
regulations, and
Expanded
infrastructure and compliance costs, may adversely impact our results of
operations.
increased
As cybersecurity threats continue to increase in frequency and sophistication,
and as the domestic and international regulatory and compliance structure
related to information and cybersecurity; data privacy and data usage; and our
digital assets offering, becomes increasingly complex and exacting, we may
be required to devote significant additional resources to strengthen our
cybersecurity capabilities, and to identify and remediate any security
regulations concerning
vulnerabilities. Compliance with
cybersecurity, data privacy and data usage could result in significant expense,
and any failure to comply could result in proceedings against us by regulatory
authorities or other third parties. Additional costs for bolstering cybersecurity
capabilities, and increased cybersecurity and data privacy compliance costs,
could adversely impact our business, financial condition and operating results.
Additionally, our clients
rigorous contractual,
certification and audit provisions regarding cybersecurity, data protection and
data usage, which may also increase our overall compliance burden and costs
in meeting such obligations.
increasingly demand
laws and
The success of our business depends on our ability to keep up with rapid
technological and other competitive changes 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.
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.
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 and skilled professional personnel that can learn and embrace
new technologies. In the current tight labor market, we have intensified our
efforts to recruit and retain talent. Competition for key personnel in the
various localities and business segments in which we operate is intense. We
have, and may continue to, experience higher compensation costs to retain
personnel, and hire new talent, that may not be offset by improved
productivity, higher revenues or increased sales. Our ability to attract and
retain key personnel, in particular senior officers or technology personnel,
including from companies that we acquire, will be dependent on a number of
factors, including prevailing market conditions, office/remote working
arrangements and compensation and benefit 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 or at
all.
Our clearinghouse operations expose us to risks, including credit or
include defaults by clearing members, or
that may
liquidity risks
insufficiencies in margins or default funds.
industry
evolving
standards,
regulatory
The markets in which we compete are characterized by rapidly changing
technology,
frequent
and
enhancements to existing products and services, the adoption of new services
and products and changing customer demands. We are reliant on our
customers that purchase our on-premise solutions to maintain a certain level of
network infrastructure for our products to operate and to allow for our support
of those products, and there is no assurance that a customer will implement
such measures. 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
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
enforcement actions.
regulatory consequences,
litigation or
including
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. For further
discussion of the default, see Note 15, “Clearing Operations,” to the
consolidated financial statements. There are no assurances that similar defaults
will not occur again, which
22
could result in losses. 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 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 Nasdaq Clearing
on 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 also
may not be sufficient.
We also have credit risk related to transaction and subscription-based revenues
that are billed to customers on a monthly or quarterly basis, in arrears.
Credit losses such as those described above could adversely affect our
consolidated financial position and results of operations.
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, has
implemented measures to enhance the resiliency of the existing processor
system. Nasdaq transferred the processor technology platform to our INET
platform and this migration further enhanced the resiliency of the processor
systems. We further improved the systems' resiliency by adding the UTP
SnapShot service. However, if 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 and financial condition.
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, or an increase in the number of delistings, on The Nasdaq Stock
Market and the Nasdaq Nordic and Nasdaq Baltic exchanges could cause a
decrease in revenues for future years. Furthermore, new listings from IPOs,
including SPACs, decreased in 2022. A prolonged decrease in the number of
listings, or failure of existing SPACs to successfully complete transactions
with target companies and dissolve, could negatively impact the growth of our
revenues. Our Corporate Solutions business is also impacted by declines in the
listings market or increases in acquisitions activity as there may be fewer
publicly-traded customers that need our products.
RISKS RELATED TO TRANSACTIONAL ACTIVITIES AND
STRATEGIC RELATIONSHIPS
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. 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:
• difficulties, costs or complications in combining 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;
• difficulties of complying with government-imposed regulations in the U.S.
and abroad, which may be conflicting;
• 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 integrating multiple acquired businesses simultaneously;
• the retention of key employees and management;
23
• 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;
providers are unavailable to us for any reason, or there are cloud service
disruptions or a delay or inability to access our exchanges, platforms or certain
of our cloud products or features, such unavailability or delays may adversely
affect our clients, which could significantly impact our reputation, operations,
business, and financial results.
• 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.
Foreign acquisitions involve risks in addition to those mentioned above,
including those related to integration of operations across different cultures
and languages, our ability to enforce contracts in various jurisdictions,
currency risks and the particular economic, political and regulatory risks
associated with specific countries. We may not be able to address these risks
successfully, or at all, without incurring significant costs, delays or other
operating problems that could disrupt our business and have a material
adverse effect on our financial condition.
For these reasons, we may not achieve the anticipated financial and strategic
benefits from our acquisitions and strategic 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 rely on third parties to perform certain functions, and our business
could be adversely affected if these third parties fail to perform as expected
or experience service interruptions affecting our operations.
We rely on third parties for regulatory, data center, cloud, data storage and
processing, data content, clearing and other services. Interruptions or delays in
services from our third-party data center hosting facilities or cloud computing
platform providers could impair the delivery of our services and harm our
business. To the extent that any of our vendors or other third-party service
providers experiences difficulties or a significant disruption, breach or outage,
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. Our access
to cloud service provider
infrastructure could be limited by a number of events, including technical or
infrastructure failures, natural disasters or cybersecurity attacks. As we
continue to grow our SaaS businesses, our dependency on the continuing
operation and availability of these cloud service providers increases. If our
cloud services from third party
For example, in 2022, we began to migrate our North American markets to
AWS in a phased approach, starting with Nasdaq MRX in December 2022.
AWS operates a platform that we use to provide services to our clients, and
therefore we are vulnerable to service outages on the AWS platform that affect
Nasdaq workloads running or stored in the AWS environment. If AWS does
not deliver our system requirements on time, fails to provide maintenance and
support to our specifications or a migration experiences integration challenges,
the successful migration of our exchanges to the AWS cloud platform may be
significantly delayed, which may adversely affect our reputation and financial
results.
We also rely on members of our trading community to maintain markets and
add liquidity. To the extent that any of our largest members experience
difficulties, materially change their business relationship with us or are unable
for any reason to perform market making activities, our business or our
reputation may be materially adversely affected.
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, 2022, goodwill totaled $8.1 billion
and intangible assets, net of accumulated amortization, totaled $2.6 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 method investments, equity securities, and property and
equipment, for potential impairment on an annual basis or more frequently if
indicators of impairment arise. We estimate the fair value of such assets by
assessing many factors, including historical performance 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 were no impairment charges recorded relating to goodwill and
indefinite-lived intangible assets and there were no material impairment
charges recorded relating to other long-lived assets in 2022, 2021 and 2020.
24
We may experience future events that may result in asset impairments. Future
disruptions to our business, prolonged economic weakness, due to pandemics
or otherwise, 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. A significant impairment charge in the future
could have a material adverse effect on our operating results.
• the inability to meet our target for return on invested capital;
• increased debt obligations, which may adversely affect our targeted debt
ratios;
• risks to the continued achievement of our strategic direction;
• risks associated with divesting employees, customers or vendors when
Acquisitions, divestments,
ventures and other
investments,
transactional activities may require significant resources and/or result in
significant unanticipated losses, costs or liabilities.
joint
divesting businesses or assets;
• declines in the value of investments;
Over the past several years, acquisitions have been significant factors in our
growth. We have divested businesses and may continue to divest additional
businesses or assets in the future. Although we cannot predict our
transactional activities, 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. Other
potential purchasers of assets in our industry may 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 early-stage companies through our Nasdaq Ventures
program and 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 in certain circumstances and financial 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, the
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:
• the inability to maintain key pre-transaction business relationships;
• increased operating costs;
• exposure to unanticipated liabilities, including after a transaction is
completed;
• incurred but unreported claims for an acquired company;
• difficulties in realizing projected efficiencies, synergies and cost savings;
and
• changes in our credit rating and financing costs.
to earnings resulting from acquisitions,
integrations and
Charges
restructuring costs may materially adversely affect the market value of our
common stock.
In accordance with U.S. GAAP, we account for the completion of our
acquisitions using the acquisition method of accounting. We allocate the total
estimated purchase price to net tangible and identifiable intangible assets
based on their fair values as of the date of completion of the acquisition and
record 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.
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RISKS RELATED TO LEGAL AND REGULATORY MATTERS
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, or due to changes in trading patterns, such as
due to the recent volatility involving the trading of certain stocks.
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.
There is no assurance 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.
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,
central securities depositories, clearinghouse and markets for violations of
applicable requirements.
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 in response to any changes
in 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.
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. 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.
In 2016, the SEC approved a plan for Nasdaq and other exchanges to establish
a CAT, to improve regulators’ ability to monitor trading activity. In addition to
increased regulatory obligations, implementation of a consolidated audit trail
has resulted in significant additional expenditures, including to implement the
new technology to meet any of the plan’s requirements. Creating the CAT has
required the development and implementation of complex and costly
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 the
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. As of
December 31, 2022, we have accrued a net receivable of $85 million in
connection with our portion of expenses related to the CAT implementation. 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 require that 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.
26
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 issue regulatory fines or may ultimately revoke
our authorizations 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.
Additionally, we are subject to the obligations under the Benchmark
Regulation ((EU) 2016/1011), compliance with which could be costly or cause
a change in our business practices.
Certain of our customers operate in a highly regulated industry. Regulatory
authorities could impose 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 and proprietary data
could have a material adverse effect on our business.
the securities markets,
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
including market structure,
technological oversight and fees for proprietary market data, connectivity and
transactions. The SEC, FINRA and the national securities exchanges have
introduced several initiatives to ensure the oversight, integrity and resilience
of markets. In December 2022, the SEC proposed significant rule changes
that, if adopted in their current form, would substantially alter how stocks are
traded in the United States. While we and other market participants have the
opportunity to submit comments on the proposal, and we will adjust our
business model in accordance with any new SEC regulations implemented,
these changes regarding trading may negatively impact our business and
revenue.
With respect to our regulated businesses, our business model can be severely
impacted by policy decisions. In May 2020, the SEC adopted an order to
require changes to the governance of securities information processors. In
December 2020, the SEC adopted a rule to modify the infrastructure for the
collection, consolidation and dissemination of market data for exchange-listed
national market stocks. In 2022, the U.S. Court of Appeals for District of
Columbia Circuit vacated portions of the governance order but upheld the
remainder of the SEC’s 2022 actions. If the remaining aspects of the order and
rule are fully implemented, they may adversely affect our revenues. The
timing for the implementation is currently unknown, and we believe they may
take two or more years to fully implement.
If the remaining aspects of the order and rule are ultimately implemented as
set forth in their adopting releases, demand for certain of our proprietary tape
share data products may be reduced, or we may have to reduce our pricing to
compete with other entrants into the market for consolidated data. Our
opponents in some markets are larger and better funded and, if successful in
influencing certain policies, may successfully advocate for positions that
adversely impact our business. These regulatory changes 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.
In Canada, all new marketplace fees and changes to existing fees, including
trading and market data fees, must be filed with and approved by the Ontario
Securities Commission. The Canadian Securities Administrators adopted a
Data Fees Methodology that restricts the total amount of fees that can be
charged for professional uses by all marketplaces to a reference benchmark.
Currently, all marketplaces are subject to annual reviews of their market data
fees tying market data revenues to pre- and post- trade market share metrics.
Permitted fee ranges are based on an interim domestic benchmark that is
subject to change to an international benchmark, which could lower the
permitted fees charged by marketplaces, which could adversely impact our
revenues.
Our European exchanges currently offer market data products to customers on
a non-discriminatory and reasonable commercial basis. The MiFID II/MiFIR
rules entail that the price for regulated market data such as pre- and post-trade
data shall be based on cost plus a reasonable margin. However, these terms are
not clearly defined. There is a risk that a different interpretation of these terms
may influence the fees for European market data products adversely. In
addition, any future actions by European Union institutions could affect our
ability to offer market data products in the same manner as today, thereby
causing an adverse effect on our market data revenues.
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.
27
We face risks related to compliance with economic sanctions (including those
administered by the U.S. Office of Foreign Assets Control), export controls,
corruption (including the U.S. Foreign Corrupt Practices Act) and money
laundering. While we maintain compliance programs to prevent and detect
potential violations, such programs cannot completely eliminate the risk of
non-compliance. Because anti-financial crime management
solutions
comprises one of our primary business offerings, a significant compliance
event involving one of these areas could more negatively impact our business
than a comparable business without this service offering.
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 business, 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. We 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. 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.
Laws and regulations regarding security and safeguarding of our systems
and services, protection of sensitive customer data and the handling of
personal data and information may affect our services or result in increased
costs, legal claims or fines against us.
Our business operates certain systems that may be considered “critical
infrastructure” under certain regulations and licenses or sells certain systems
or services to customers that are used by customers to fulfill certain core
business requirements or process certain sensitive data. In response to recent
events involving cybersecurity breaches, including ransomware
attacks, regulatory authorities are engaging in rulemaking to heighten
cybersecurity requirements and obligations to notify authorities and/or take
other action in response to a suspected incident. Such regulations may impact
the requirements and cost of delivery for impacted systems and services and,
in the event of an incident, increase the cost and complexity of our response
and the potential financial and reputation impact from fines or private
litigation. New regulations may also impact customer decision making and
conditions on contracting for our services.
Our businesses and internal operations rely on the processing of data in many
jurisdictions and the movement of data, including personal data, across
national borders. Legal and contractual requirements relating
the
processing, including, but not limited to, collection, storage, handling, use,
disclosure, transfer and security, of personal data continue to evolve and
regulatory scrutiny and customer requirements in this area are 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 with privacy and other laws to
which we are subject.
to
Laws and regulations such as the European Union and United Kingdom
General Data Protection Regulation, or GDPR, the California Privacy Rights
Act, or CPRA, and other comparable laws and regulations adopted globally
and within the United States and Canada can apply to our processing of their
residents' personal data by Nasdaq legal entities regardless of the location of
such entities; such laws may also require our customers located in such
jurisdictions to contractually obligate Nasdaq to comply.
In addition to directly applying to certain Nasdaq business activities, these
laws and industry-specific regulations, such as the Health Insurance
Portability and Accountability Act (HIPAA) and the Gramm Leach Bliley Act,
impact many of our customers, which may affect their decisions to purchase
our services. Under certain laws and regulations, as a supplier to such
customers, regulators may engage in direct enforcement actions or seek to
impose liability on Nasdaq if we do not comply with them. Our efforts to
comply with 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. The enactment of more restrictive laws, rules or
regulations, future enforcement actions or investigations, or the creation of
new rights to pursue damages could impact us through increased costs or
restrictions on our business, and noncompliance could result in regulatory
penalties and significant legal liability.
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 may reduce our
net income, or could adversely affect our ability to continue our
28
capital allocation program or effect strategic transactions in a tax-favorable
manner. In addition, such changes, including federal or state financial
transaction taxes, may increase the cost of our offerings or services, which
may cause our clients to reduce their use of our services.
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 ensure 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
taxes imposed on our clients or our subsidiaries.
RISKS RELATED TO LIQUIDITY AND CAPITAL RESOURCES
A downgrade of our credit rating could increase the cost of our funding
from the capital markets.
Our 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 such 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 our senior notes fluctuates
based on our credit ratings.
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, 2022 was $5.4 billion. We may borrow
additional amounts by utilizing available liquidity under our existing credit
facilities, issuing additional debt securities or issuing short-term, unsecured
commercial paper notes through our commercial paper program.
Our leverage and reliance on the capital markets 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 effect certain fundamental
transactions, dispose of certain assets, incur additional indebtedness and grant
liens on assets. 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 repayment of all amounts outstanding.
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. Rising interest rates could
adversely affect our ability to pursue new financing opportunities, and it may
be more expensive for us to issue new debt securities. 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.
If we need to raise funds through issuing additional equity, our equity holders
will suffer dilution. If we need to raise funds through incurring additional
debt, we may become subject to covenants 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.
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RISKS RELATED TO INTELLECTUAL PROPERTY AND BRAND
REPUTATION
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, other financial and statistical
information or ESG-related disclosures;
• 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 Services and marketplace technology products, the accuracy of
the quote and trade information provided by our Data & Listing Services
business and the accuracy of calculations used by our Indexes 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 or our listing rules;
• any negative publicity surrounding the use of our products and/or 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.
risk
to our brand and
Although we monitor developments, including social media, for areas of
reputation, negative publicity or
potential
misrepresentations by third parties, particularly on social media, may
adversely impact our credibility as a leader in the global capital markets and
as a source for data and analytics. This may have an adverse effect on our
brands, business and operating results. Damage to our reputation could cause
some issuers not to list their securities on our exchanges or switch to a
different exchange. Reputational damage may also reduce trading volumes or
values on our exchanges or cause us to lose customers in our Data & Listing
Services, Index, Workflow & Insights or Marketplace Technology businesses.
This, in turn, may have a material adverse effect on our business, financial
condition and operating results.
Failure to meet customer expectations or deadlines for the implementation
of our products could result in negative publicity, losses and reduced sales,
each of which may harm our reputation, business and results of operations.
We generally mutually agree with our customers on the duration, budget and
costs associated with the implementation of certain of our products,
particularly our market technology large-scale market infrastructure projects.
Various factors may cause implementations to be delayed, inefficient or
otherwise unsuccessful, including due to unforeseen project complexities, our
deployment of insufficient resources or other external factors. The effects of a
failure to meet an implementation schedule could include monetary credits for
current or future service engagements, a reduction in fees for the project, or
the expenditure of additional expenses to mitigate such delays. In addition,
time-consuming implementations may also increase the personnel we must
allocate to such customer, thereby increasing our costs and diverting attention
from other projects. Unsuccessful, lengthy, or costly customer implementation
projects could result
in claims from customers, decreased customer
satisfaction, harm to our reputation, and opportunities for competitors to
displace us, each of which could have an adverse effect on our reputation,
business and results of operations.
Our reputation or business could be negatively impacted by ESG matters
and our reporting of such matters.
We communicate certain ESG-related initiatives, goals, and/or commitments
regarding environmental matters, diversity, vendors and suppliers and other
matters in our annual Sustainability Report, Task Force on Climate-related
Financial Disclosures, or TCFD, Report, on our website, in our filings with the
SEC, and elsewhere. These initiatives, goals, or commitments could be
difficult to achieve and costly to implement. For example, in November 2022,
we announced our commitment to achieve net-zero for Scope 3 greenhouse
gas emissions by 2050, the achievement of which relies, in large part, on the
accuracy of our estimates and assumptions, on the engagement of our value
chain to reduce emissions and set their net-zero targets, and procuring
renewable energy for our real estate and data center portfolios. We could fail
to achieve, or be perceived to fail to achieve, this or other ESG-related
initiatives, goals, or commitments. In addition, we could be criticized for the
timing, scope or nature of these initiatives, goals, or commitments, or for any
revisions to them. We could be subject to litigation or regulatory enforcement
actions regarding the accuracy, adequacy, or completeness of our ESG-related
disclosures. Our actual or perceived failure to achieve our ESG-related
initiatives, goals, or commitments could negatively impact our reputation or
otherwise materially harm our business.
30
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.
jurisdictions. However, effective
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 for
software products and pursue patent protection for inventions developed by us.
We hold a number of patents, patent applications and licenses in the United
trademark,
States and other foreign
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. 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.
GENERAL RISK FACTORS
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 that can be
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, or if regulators or counterparties require us to increase capital
deployed in certain of our regulated subsidiaries, we may be unable to satisfy
our obligations, which would have a material adverse effect on our business,
financial condition and operating results.
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, pandemics, 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;
• volatility in commodity markets, including the energy markets;
• inflation;
• changes in government monetary or tax policy;
• the imposition of governmental economic sanctions on countries in which
we do business or where we plan to expand our business; and
• the perceived attractiveness of the U.S. or European capital markets.
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.
31
Additionally, since borrowings under our credit facilities bear interest at
variable rates and commercial paper is issued at prevailing interest 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 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
likelihood of such errors or
vulnerabilities is heightened as we acquire new products from third parties,
whether as a result of acquisitions or otherwise.
implementation. Additionally,
the
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, or could fail to perform its intended purpose. Because our
clients depend on our solutions for critical business functions, any service
interruptions, failures or other issues may result in lost or delayed market
acceptance and lost sales, or negative customer experiences that could damage
our reputation, resulting in the loss of customers, loss of revenues and liability
for damages, which may adversely affect our business, operating results and
financial condition.
Climate change may have a long-term adverse impact on our business, and
climate change disclosure requirements may reduce demand for listings on
our exchanges.
While we seek to mitigate our business risks associated with climate change
by establishing robust environmental and sustainability programs, there are
inherent climate related risks wherever our business is conducted. There is an
increased focus from our regulators, investors, clients, employees, and other
stakeholders concerning corporate citizenship and sustainability matters.
Access to clean water and reliable energy in the communities where we
conduct our business, whether for our offices, data centers, vendors, clients or
other stakeholders, is a priority. For example, changes in weather where we
operate may increase the costs of powering and cooling our data centers or the
facilities that we use to operate our exchanges and clearinghouses, develop our
products or provide cloud-based services. Climate related events, including
extreme weather events and their impact on the critical infrastructure in the
United States and elsewhere, have the potential to disrupt our business or the
business of our clients; cause increased volatility in commodity markets in
which Nasdaq Clearing operates as a clearinghouse, which may result in
Nasdaq Clearing holding insufficient collateral for such volatility; lead to an
increase in costs of raw materials, which may adversely affect certain of our
listed companies operating in certain sectors and create adverse market
conditions, including trading volatility beyond historical levels, any of which
could adversely affect our business, reputation, financial condition and
operating results. Additionally, if the SEC or other federal regulatory agencies
impose comprehensive reporting obligations regarding climate change on
public companies, there may be a decrease in new listings or an increase in
delistings of our listed companies, which may adversely affect our business,
financial condition and operating results. Such new regulations, whether in the
U.S. or in other countries in which we operate, could also cause us to incur
additional compliance and reporting costs.
32
Our businesses operate in various international markets, including certain
emerging markets that are subject to greater political, economic and social
uncertainties than developed countries.
Our businesses operate in various international markets, including but not
limited to Northern Europe, the Baltics, the Middle East, Africa and Asia, and
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,
have economies that may be subject to greater political, economic and social
uncertainties than countries with more developed institutional structures,
which may increase our operational risk.
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, pandemics (such as COVID-19), 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 east coast of the U.S., and Stockholm, Sweden,
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.
Any interruption in our critical business functions or systems could negatively
impact our financial condition and operating results. Additionally, some
colocation customers may 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, Canada, the
United Kingdom, Australia and many other foreign countries. We therefore
have significant exposure to exchange rate movements between the Euro,
Swedish Krona, the Canadian dollar and other foreign currencies against 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, interest expense and financial condition into U.S.
dollars as part of the preparation of our consolidated financial statements.
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 is comprised of senior executives and has the
responsibility for regularly reviewing risks and referring significant risks to
the board of directors or specific board committees. Local risk management
committees in our international offices provide local risk oversight and
escalation to local boards, as appropriate. Certain 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.
Decisions to declare future dividends on our common stock will be at the
discretion of our board of directors and 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 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.
33
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
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We conduct our business operations in leased facilities. We do not own any
real property. Our U.S. headquarters are located in New York, New York, and
our European headquarters are located in Stockholm, Sweden. We also lease
space in multiple locations around the world, which are used for research and
development, sales and support, and administrative activities, as well as for
data centers and disaster preparedness facilities.
Generally, our properties are not allocated for use by a particular segment.
Instead, most of our properties are used by two or more segments. We
regularly monitor the facilities we occupy to ensure that they suit our needs,
particularly as we have reopened all our global offices and our employees
have transitioned to a hybrid work environment. We believe the facilities that
we occupy are adequate for the purposes for which they are currently used and
are well-maintained. See Note 16, “Leases,” to the consolidated financial
statements for further discussion.
Item 3. Legal Proceedings
For a description of our legal proceedings, if any, see “Legal and Regulatory
Matters - Litigation,” of Note 18, “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.
taken at annual meetings; and
Market Information
• authorize the issuance of undesignated preferred stock, or “blank check”
preferred stock, which could be issued by our board of directors without
stockholder approval.
Our common stock is listed on The Nasdaq Stock Market under the ticker
symbol “NDAQ.” As of February 13, 2023, we had approximately 209
holders of record of our common stock.
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 three years after the stockholder becomes an interested stockholder, unless
the corporation’s board of directors and stockholders approve the business
combination in a prescribed manner.
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.
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.
34
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The table below represents repurchases made by or on behalf of us or any
“affiliated purchaser” of our common stock during the fiscal quarter ended
December 31, 2022:
(c)
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
(d) Maximum
Dollar Value of
Shares that
May Yet Be
Purchased
Under the Plans
or Programs (in
millions)
(a)
Total Number of
Shares Purchased
(b) Average
Price Paid Per
Share
— $
— $
27,913 $
Period
October 2022
Share repurchase
program
Employee
transactions
November 2022
Share repurchase
program
Employee
transactions
December 2022
Share repurchase
program
Employee
transactions
Total Quarter Ended December 31, 2022
Share repurchase
program
Employee
transactions
56,480 $
84,624 $
231 $
— $
— $
—
— $
293
59.76
N/A
N/A
—
— $
293
66.52
N/A
N/A
—
— $
650
61.76
N/A
N/A
—
— $
61.11
N/A
650
N/A
In the preceding table:
• N/A - Not applicable.
• See “Share Repurchase Program,” of Note 12, “Nasdaq Stockholders’
Equity,” to the consolidated financial statements for further discussion of
our share repurchase program.
• Employee transactions represents shares surrendered to us to satisfy tax
withholding obligations arising from the vesting of restricted stock and
PSUs previously issued to employees.
35
The following performance graph and related information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by
reference into any of our other filings under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
The following graph compares the total return of our common stock to the Nasdaq Composite Index, the S&P 500 and a peer group selected by us, shown below,
for the past five years:
PERFORMANCE GRAPH
•
•
•
•
•
ASX Limited
B3 S.A.
Bolsas Mexicana de Valores, S.A.B. de C.V.
Cboe
CME Group Inc.
• Deutsche Börse AG
• Euronext N.V.
• Hong Kong Exchanges and Clearing Limited
• ICE
• Japan Exchange Group, Inc.
• LSE
• Singapore Exchange Limited
• TMX Group Limited
Peer Group
The figures represented below assume an initial investment of $100 in the common stock or index at the closing price on December 31, 2017 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 12/31/2017 in stock or index, including reinvestment of dividends.
Nasdaq, Inc.
Nasdaq Composite Index
S&P 500
Peer Group
Fiscal Year Ended December 31,
2017
2018
2019
2020
2021
2022
$
100 $
100
100
100
108 $
97
96
112
145 $
133
126
149
$
183
192
149
186
293 $
235
192
208
260
159
157
184
36
Item 6. [Reserved]
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
growth strategy, products and services, and competitive strengths, see “Item 1.
Business.” Unless stated otherwise, the comparisons presented in this
discussion and analysis refer to the year-over-year comparison of changes in
our financial condition and results of operations as of and for the fiscal years
ended December 31, 2022 and December 31, 2021. Discussion of fiscal year
2021 items and the year-over year comparison of changes in our financial
condition and results of operations as of and for the fiscal years ended
December 31, 2021 and December 31, 2020 can be found in Part II, “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, which was previously filed with the SEC on February 23,
2022, with the exception of certain discussions impacted by the new corporate
structure.
Business Segments
In September 2022, we announced a new organizational structure which aligns
our businesses more closely with the foundational shifts that are driving the
evolution of the global financial system. The new corporate structure includes
three business segments: Market Platforms, Capital Access Platforms and
Anti-Financial Crime. All prior periods have been restated to conform to the
current period presentation. See Note 1, “Organization and Nature of
Operations,” and Note 19, “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 three separate segments. See “Part I, Item 1.
Business” for additional discussion on recent developments and highlights.
Nasdaq's Operating Results
The following tables summarize our financial performance for the year ended
December 31, 2022 when compared to the same period in 2021 and for the
year ended December 31, 2021 when compared to the same period in 2020.
The comparability of our results of operations between reported periods is
impacted by the acquisition of Verafin in February 2021. See “2021
Acquisition,” of Note 4, “Acquisitions and Divestiture,” to the consolidated
financial statements for further discussion. For a detailed discussion of our
results of operations, see “Segment Operating Results” below.
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions, except per share amounts)
3,582 $
3,420 $
2,903
4.7 %
17.8 %
2,018
1,979
1,669
2.0 %
18.6 %
1,564
1,441
1,234
8.5 %
16.8 %
1,125 $
1,187 $
933
(5.2)%
27.2 %
2.26 $
2.35 $
1.86
(3.8)%
26.3 %
0.78 $
0.70 $
0.65
11.4 %
7.7 %
Revenues less
transaction-
based expenses $
Operating
expenses
Operating
income
Net income
attributable to
Nasdaq
Diluted earnings
per share
Cash dividends
declared per
common share $
$
$
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.”
The following chart summarizes our ARR (in millions):
37
The following chart summarizes our quarterly annualized SaaS revenues for
our Solutions Businesses, which are comprised of the Capital Access
Platforms and Anti-Financial Crime segments and
the Marketplace
Technology business within the Market Platforms segment, for the three
months ended December 31, 2022, 2021 and 2020 (in millions):
ARR for a given period is the annualized revenue derived from subscription
contracts with a defined contract value. This excludes contracts that are not
recurring, are one-time in nature, or where the contract value fluctuates based
on defined metrics. Also excluded are contracts that are signed but not yet
commenced. ARR is one of our key performance metrics to assess the health
and trajectory of our recurring business. ARR does not have any standardized
definition and is therefore unlikely to be comparable to similarly titled
measures presented by other companies. ARR should be viewed
independently of revenue and deferred revenue and is not intended to be
combined with or to replace either of those items. ARR is not a forecast and
the active contracts at the end of a reporting period used in calculating ARR
may or may not be extended or renewed by our customers.
The ARR chart includes:
▪
▪
▪
Anti-Financial Crime support and SaaS subscription contracts
Proprietary market data subscriptions and annual listing fees
within our Data & Listing Services business, index data
subscriptions and guaranteed minimum on futures contracts
within our Index business and subscription contracts under our
Workflow & Insights business.
Market technology support and SaaS subscription contracts as
well as trade management services contracts, excluding one-time
service requests.
38
Percentage of Revenues Less Transaction-based Expenses by Segment for
the:
Segment Operating Results
The following table presents our revenues by segment, transaction-based
expenses for our Market Platforms segment and total revenues less
transaction-based expenses:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
$
4,225 $
4,048 $
4,179
4.4 %
(3.1)%
1,684
1,568
1,287
7.4 %
21.8 %
306
11
6,226
231
39
5,886
116
43
5,625
32.5 %
(71.8)%
5.8 %
99.1 %
(9.3)%
4.6 %
(2,092)
(2,168)
(2,028)
(3.5)%
6.9 %
(552)
(298)
(694)
85.2 % (57.1)%
$
3,582 $
3,420 $
2,903
4.7 %
17.8 %
Market
Platforms
Capital Access
Platforms
Anti-Financial
Crime
Other revenues
Total revenues
Transaction
rebates
Brokerage,
clearance and
exchange fees
Total revenues
less
transaction-
based
expenses
The following charts present our Market Platforms, Capital Access Platforms
and Anti-Financial Crime segments as a percentage of our total revenues, less
transaction-based expenses.
39
40
MARKET PLATFORMS
The following tables present revenues from our Market Platforms segment:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
U.S. Equity
Derivative
Trading
Revenues
$
1,252 $
1,367 $ 1,122
(8.4)%
21.8 %
3,663 $
3,503 $
3,654
4.6 %
(4.1)%
Section 31 fees
89
32
69
178.1 %
(53.6)%
Trading Services $
Marketplace
Technology
Total Market
Platforms
$
562
545
525
3.1 %
3.8 %
4,225 $
4,048 $
4,179
4.4 %
(3.1)%
Transaction-based expenses:
Transaction
rebates
(878)
(1,018)
(32)
(6)
(828)
(69)
(13.8)%
178.1 %
22.9 %
(53.6)%
(7)
(50.0)%
(14.3)%
(89)
(3)
Transaction-based expenses:
Transaction
rebates
Brokerage,
clearance and
exchange fees
Total Market
Platforms, net
(2,092)
(2,168)
(2,028)
(3.5)%
6.9 %
(552)
(298)
(694)
85.2 %
(57.1)%
$
1,581 $
1,582 $
1,457
(0.1)%
8.6 %
Trading Services
Our Trading Services business includes equity derivatives trading, cash equity
trading, Nordic fixed income trading & clearing, U.S. Tape plans and other
revenues. The following tables present net revenues by product from our
Trading Services business:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
U.S. Equity
Derivative
Trading
Cash Equity
Trading
U.S. Tape plans
Other
Trading Services,
net
$
371 $
343 $
287
8.2 %
19.5 %
397
149
102
429
155
110
381
162
102
(7.5)%
(3.9)%
(7.3)%
12.6 %
(4.3)%
7.8 %
$
1,019 $
1,037 $
932
(1.7)%
11.3 %
In the table above, Other includes Nordic fixed income trading & clearing,
Nordic derivatives, Nordic commodities, and Canadian cash equities trading.
U.S. Equity Derivative Trading
The following tables present total revenues, transaction-based expenses, and
total revenues less transaction-based expenses as well as key drivers from our
U.S. Equity Derivative Trading business:
Section 31 fees
Brokerage and
clearance fees
U.S. Equity
derivative
trading
revenues, net
$
371 $
343 $
287
8.2 %
19.5 %
Section 31 fees are recorded as equity derivative and cash equity derivative
trading revenues with a corresponding amount recorded in transaction-based
expenses. 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 traded. The SEC implemented a fee increase in May 2022 and a
decrease in February 2021. Since the amount recorded in revenues is equal to
the amount recorded as Section 31 fees, there is no impact on our net
revenues.
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
Year Ended December 31,
2022
2021
2020
38.2
37.2
27.7
11.6 %
12.4 %
12.7 %
8.0 %
2.8 %
5.7 %
2.3 %
1.6 %
8.1 %
1.4 %
6.6 %
4.3 %
1.6 %
9.8 %
0.2 %
7.8 %
5.6 %
0.7 %
32.0 %
34.4 %
36.8 %
41
U.S. equity derivative trading revenues decreased in 2022 compared with
2021 primarily due to lower overall matched market share executed on
Nasdaq's exchanges and lower gross capture rate, partially offset by higher
industry trading volumes.
U.S. equity derivative trading revenues less transaction-based expenses
increased in 2022 compared with 2021 primarily due to higher capture rates
and higher industry trading volumes, and lower transaction rebates, partially
offset by lower overall matched market share executed on Nasdaq's
exchanges.
U.S. equity derivative trading and clearing revenues and U.S. equity derivative
trading and clearing revenues less transaction-based expenses increased in
2021 compared with 2020 primarily due to higher U.S. industry trading
volumes, partially offset by lower overall U.S. matched market share executed
on Nasdaq's exchanges and a lower capture rate.
Transaction rebates, in which we credit a portion of the execution charge to
the market participant, decreased in 2022 compared with 2021 primarily due
to lower overall U.S. matched market share executed on Nasdaq's exchanges
and lower rebate capture rate, partially offset by higher industry trading
volumes. Transaction rebates increased in 2021 compared with 2020 primarily
due to higher U.S. industry trading volumes, partially offset by lower overall
U.S. matched market share executed on Nasdaq's exchanges and a lower
rebate capture rate.
Cash Equity Trading Revenues
The following tables present total revenues, transaction-based expenses, and
total revenues less transaction-based expenses as well as key drivers and other
metrics from our Cash Equity trading business:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
Cash Equity
Trading
Revenues
$
1,605 $
1,578 $
1,582
1.7 %
(0.3)%
Section 31 fees
Transaction-
based expenses:
Transaction
rebates
Section 31 fees
Brokerage and
clearance fees
Cash equity
trading
revenues, net
436
229
586
90.4 %
(60.9)%
(1,184)
(1,118)
(1,169)
5.9 %
(4.4)%
(436)
(229)
(586)
90.4 %
(60.9)%
(24)
(31)
(32)
(22.6)%
(3.1)%
$
397 $
429 $
381
(7.5)%
12.6 %
See discussion in "U.S. Equity Derivative Trading" for an explanation of
Section 31 fees and the period over period analysis.
Year Ended December 31,
2022
2021
2020
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
11.9
522.8
11.4
491.9
10.9
508.3
16.2 %
15.8 %
16.8 %
0.5 %
0.8 %
0.6 %
0.7 %
0.9 %
0.6 %
17.5 %
17.1 %
18.3 %
35.2 %
52.7 %
34.9 %
52.0 %
31.8 %
50.1 %
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
908,813
$
5.4
71.5 %
1,036,523
933,822
$
6.4
$
5.6
76.9 %
78.1 %
In the tables above, total market shares 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.
Cash equity trading revenues increased in 2022 compared with 2021 primarily
due to higher U.S. industry trading volumes and higher overall U.S. matched
market share executed on Nasdaq's exchanges, partially offset by an
unfavorable impact of changes in foreign exchange rates of $16 million, lower
U.S. gross capture rate, lower European trading volumes and lower European
market share executed on Nasdaq's exchanges.
Cash equity trading revenues less transaction-based expenses decreased in
2022 compared with 2021 primarily due to lower capture rate, the unfavorable
impact of changes in foreign exchange rates of $16 million, lower European
trading volumes and lower European market share executed on Nasdaq's
exchanges, partially offset by higher U.S. industry trading volumes.
42
Cash equity trading revenues decreased in 2021 compared with 2020 primarily
due to lower overall U.S. matched market share executed on Nasdaq's
exchanges, partially offset by higher U.S. gross capture rates, higher U.S.
industry trading volumes, higher European value traded and a favorable
impact from changes in foreign exchange rates.
Cash equity trading revenues less transaction-based expenses increased in
2021 compared with 2020 primarily due to higher U.S. capture rates, higher
U.S. industry trading volumes, higher European value traded and a favorable
impact from changes in foreign exchange rates, partially offset by lower
overall U.S. matched market share executed on Nasdaq's exchanges.
Transaction rebates increased in 2022 compared with 2021. For The Nasdaq
Stock Market 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. The increase was primarily due to higher
U.S. industry volumes and higher U.S. matched market share executed on
Nasdaq's exchanges, partially offset by lower rebate capture rate. Transaction
rebates decreased in 2021 compared with 2020, primarily due to lower overall
U.S. matched market share executed on Nasdaq's exchanges and a lower
rebate capture rate, partially offset by higher U.S. industry trading volumes.
U.S. Tape Plans
The following tables present revenues from our U.S. Tape plans business:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
U.S. Tape plans $
149 $
155 $
162
(3.9)%
(4.3)%
U.S. Tape plans revenues decreased in 2022 compared with in 2021 and 2021
compared with 2020 primarily due to lower market share and usage.
Other
Other includes Nordic fixed income trading and clearing, Nordic derivatives,
Nordic commodities and Canadian cash equities trading. The following tables
present revenue and key driver from our Other business:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
Other
$
102 $
110 $
102
(7.3)%
7.8 %
In the table above, other includes transaction rebates of $30 million, $32
million and $31 million in 2022, 2021 and 2020 respectively.
Year Ended December 31,
2022
2021
2020
Nasdaq Nordic and Nasdaq Baltic options and futures
Total average daily volume of options
and futures contracts
296,626
287,182
320,204
In the tables above, Nasdaq Nordic and Nasdaq Baltic total average daily
volume of options and futures contracts include Finnish option contracts
traded on Eurex for which Nasdaq and Eurex have a revenue sharing
arrangement.
Other revenues decreased in 2022 compared with 2021 primarily due to the
unfavorable impact of changes in foreign exchange rates of $14 million and
lower commodities products revenues, partially offset by higher European
trading volumes and higher collateral management services revenues. Other
revenues increased in 2021 compared with 2020 primarily due to the favorable
impact of changes in foreign exchange rates of $5 million, higher capture rate
and higher European clearing products revenues, partially offset by lower
European trading volumes.
Marketplace Technology
Marketplace Technology includes our trade management services and market
technology businesses.
The following tables present revenues and key drivers from our Marketplace
Technology business:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
Marketplace
Technology
$
562 $
545 $
525
3.1 %
3.8 %
As of or
Three Months Ended December 31,
2022
2021
(in millions)
2020
ARR
Quarterly annualized SaaS
revenues
Order intake
$
$
503 $
479 $
39
264 $
31
304 $
468
27
167
In the table above, order intake is for our market technology business and
represents the total contract value of orders signed during the period.
Marketplace technology revenues increased in 2022 compared with 2021 and
2021 compared with 2020 primarily due to higher trade management services
revenues associated with increased demand for connectivity services, partially
offset by lower market technology revenues. The decrease in market
technology revenues in 2022 was due to the successful completion of long-
term contracts in 2021 and the unfavorable impact of changes in foreign
exchange rates of $10 million, partially offset by growth in SaaS-based
revenues. The decrease in market technology revenues in 2021 was primarily
due to lower professional services revenues, partially offset by an increase in
SaaS revenues.
43
CAPITAL ACCESS PLATFORMS
The following tables present revenues and key drivers from our Capital
Access Platforms segment:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021 2021 vs. 2020
(in millions)
$
729 $
486
680 $
459
469
429
574
324
389
7.2 %
5.9 %
18.5 %
41.7 %
9.3 %
10.3 %
$
1,684 $
1,568 $
1,287
7.4 %
21.8 %
Data & Listing
Services
Index
Workflow &
Insights
Total Capital
Access
Platforms
As of or
Three Months Ended December 31,
2022
2021
(in millions)
2020
ARR
Quarterly annualized SaaS revenues
$
$
1,192 $
388 $
1,113 $
356 $
986
323
Data & Listing Services Revenues
The following tables present key drivers from our Data & Listing Services
business:
IPOs
The Nasdaq Stock Market
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic
Total new listings
The Nasdaq Stock Market
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic
Number of listed companies
The Nasdaq Stock Market
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic
In the tables above:
Year Ended December 31,
2022
2021
2020
161
38
752
174
366
1,000
63
207
316
45
454
67
4,230
4,178
3,392
1,251
1,235
1,071
• The Nasdaq Stock Market new listings include IPOs, including issuers that
switched from other listing venues and separately listed ETPs. For the years
ended December 31, 2022, 2021 and 2020, IPOs included 74, 433 and 132
SPACs, respectively.
• Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 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.
• Number of total listed companies on The Nasdaq Stock Market for the years
ended December 31, 2022, 2021 and 2020 included 528, 441 and 412 ETPs,
respectively.
• Number of total listed companies on the exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic represents companies listed on these exchanges
and companies on the alternative markets of Nasdaq First North.
Data & Listing Services revenues increased in 2022 compared with 2021 and
2021 compared with 2020. The increase in 2022 was primarily due to an
increase in annual listing fees, due to an increase in the overall number of
listed companies, and an increase in proprietary data revenues driven by
higher international demand, partially offset by lower initial listings fees and
the unfavorable impact of changes in foreign exchange rates of $21 million.
The increase in 2021 was primarily due to an increase in annual and initial
listing fees due to the increase in the overall number of listed companies and
an increase in proprietary data revenues driven by higher international
demand.
Index Revenues
The following tables present key drivers from our Index business:
As of or
Three Months Ended December 31,
2022
2021
2020
Number of licensed ETPs
TTM change in period end ETP AUM tracking Nasdaq
indexes (in billions)
Beginning balance
379
$
$
Net (depreciation) appreciation
Net impact of ETP sponsor
switches
Net inflows
Ending balance
Quarterly average ETP AUM
tracking Nasdaq indexes (in
billions)
Quarterly annualized SaaS revenues
(in millions)
$
$
$
362
339
359 $
83
(92)
74
424 $
400 $
208 $
233
80
—
46
359
334
179
424
(142)
(1)
34
315
326
220
$
$
$
In the table above, TTM represents trailing twelve months.
Index revenues increased in 2022 compared with 2021 and 2021 compared
with 2020. The increase in 2022 was primarily due to higher licensing
revenues from futures trading linked to the Nasdaq-100 Index, partially offset
by lower AUM in ETPs linked to Nasdaq indexes. The increase in 2021 was
primarily due to higher licensing revenues from higher average AUM in ETPs
linked to Nasdaq indexes and higher licensing revenues from futures trading
linked to the Nasdaq-100 Index.
44
Workflow & Insights Revenues
OTHER REVENUES
Workflow & Insights revenues increased in 2022 compared with 2021 and
2021 compared with 2020. The increase in both periods was due to an increase
in both analytics and corporate solutions revenues. The increase in analytics
revenues for both periods was primarily due to the growth in our eVestment
and Solovis products driven by new sales, strong retention, and higher average
revenue per client from expanded offerings. The increase in corporate
solutions for both periods was due to higher adoption of our investor relations
intelligence products as well as new ESG solutions, with ESG solutions being
the primary driver of the increase in 2022.
ANTI-FINANCIAL CRIME
The following tables present revenues and key drivers from our Anti-Financial
Crime segment:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
Anti-Financial Crime $
306 $
231 $
116
32.5 %
99.1 %
As of or
Three Months Ended December 31,
2022
2021
(in millions)
2020
ARR
Signed ARR
Quarterly annualized SaaS revenues
$
312 $
338
298
269 $
288
253
111
—
97
In the table above, signed ARR reflects ARR recognized as revenue in the
current period as well as ARR for new contracts signed but not yet
commenced. We began tracking signed ARR in 2021 following our
acquisition of Verafin, and thus there is no available metric for 2020.
Anti-financial crime revenues increased in 2022 compared with 2021
primarily due to an increase in demand for fraud detection and anti-money
laundering solutions and strong performance by our surveillance business in
new sales to existing clients and new customer acquisitions. The increase was
also driven by a $28 million purchase price adjustment on Verafin deferred
revenue in 2021 and the inclusion of a full year of Verafin revenues in 2022.
The increase in 2021 compared with 2020 was due to the inclusion of
revenues from our acquisition of Verafin and growth in our surveillance
solutions.
Other revenues include revenues related to our Nordic broker services
business, for which we completed the wind-down in June 2022, as well as
revenues associated with our U.S. Fixed Income business, which was sold in
June 2021. Prior to the closing of the transaction, these revenues were
included in our Market Platforms and Capital Access Platforms segments. See
“2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” to the
consolidated financial statements for further discussion of this divestiture.
Additionally, for the years ended December 31, 2021 and 2020, other revenues
include revenues associated with the NPM business which we contributed in
July 2021 to a standalone, independent company, of which we own the largest
minority interest, together with a consortium of third-party financial
institutions. Prior to July 2021, these revenues were included in our Capital
Access Platforms segment. For the twelve months ended December 31, 2022,
other revenues also include a transitional services agreement associated with a
divested business.
EXPENSES
Operating Expenses
The following table presents our operating expenses:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
$
1,003 $
938 $
786
6.9 %
19.3 %
140
144
137
(2.8)%
5.1 %
207
104
125
51
258
33
82
15
186
109
85
57
278
64
87
31
151
107
11.3 %
(4.6)%
23.2 %
1.9 %
142
47.1 %
(40.1)%
39
(10.5)%
46.2 %
202
24
33
48
(7.2)%
(48.4)%
(5.7)%
(51.6)%
37.6 %
166.7 %
163.6 %
(35.4)%
$
2,018 $
1,979 $
1,669
2.0 %
18.6 %
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
The increase in compensation and benefits expense in 2022 compared with
2021 was primarily driven by continued investment in employees to drive
growth and inflationary pressures, partially offset by a favorable impact from
foreign exchange rates of $42 million.
45
Headcount,
including employees of non-wholly owned consolidated
subsidiaries, increased to 6,377 employees as of December 31, 2022 from
5,814 as of December 31, 2021 reflecting growth across each of our three
segments.
Professional and contract services expense decreased in 2022 compared with
2021 primarily due to a favorable impact from foreign exchange rates and a
decrease in legal fees, partially offset by an increase in consulting costs.
Computer operations and data communications expense increased in 2022
compared with 2021 primarily due to higher software costs and higher costs
related to new cloud initiatives.
Occupancy expense decreased in 2022 compared with 2021 primarily due to a
favorable impact from foreign exchange rates.
General, administrative and other expense increased in 2022 compared with
2021 primarily due to an accrual related to a legal matter and higher travel
costs.
Marketing and advertising expense decreased in 2022 compared with 2021,
reflecting lower IPO activity.
Depreciation and amortization expense decreased in 2022 compared with
2021 due to an impairment charge of $14 million in 2021 related to a finite-
lived intangible asset for customer relationships associated with the wind
down of a previous acquisition and a favorable impact from foreign exchange
rates.
Regulatory expense decreased in 2022 compared with 2021 due to a charge in
2021 associated with an administrative fine issued by the SFSA. See “Nasdaq
Commodities Clearing Default,” of Note 15, “Clearing Operations,” to the
consolidated financial statements for further discussion of the SFSA
administrative fine.
We have pursued various strategic initiatives and completed acquisitions and
divestitures 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
vary based on the size and frequency of the activities described above.
See Note 20, “Restructuring Charges,” to the consolidated financial statements
for further discussion of our 2022 divisional alignment program and 2019
restructuring plans and charges associated with these plans.
Non-operating Income and Expenses
The following table presents our non-operating income and expenses:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
$
7 $
1 $
(129)
(125)
4
(101)
600.0 %
3.2 %
(75.0)%
23.8 %
(122)
(124)
(97)
(1.6)%
27.8 %
—
2
84
81
—
5
(100.0)%
(97.5)%
N/M
1,520.0 %
31
52
70
(40.4)%
(25.7)%
$
(89) $
93 $
(22)
(195.7)%
(522.7)%
Interest income
Interest expense
Net interest
expense
Net gain on
divestiture of
business
Other income
Net income from
unconsolidated
investees
Total non-operating
income
(expenses)
_______
N/M Not meaningful.
The following table presents our interest expense:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021
2021 vs. 2020
(in millions)
120 $
115 $
93
4.3 %
23.7 %
7
2
129 $
7
3
125 $
6
2
101
— %
(33.3)%
3.2 %
16.7 %
50.0 %
23.8 %
$
Interest expense
on debt
Accretion of debt
issuance costs
and debt
discount
Other fees
Interest expense $
Interest income increased in 2022 compared with 2021 primarily due to an
increase in interest rates.
Interest expense increased in 2022 compared with 2021 primarily due to an
increase in interest rates related to borrowings under our commercial paper
program.
The net gain on divestiture of business in 2021 relates to the sale of our U.S.
Fixed Income business, which was part of our FICC business within our
Market Services segment. We recognized a pre-tax gain on the sale of $84
million, net of disposal costs. See “2021 Divestiture,” of Note 4, “Acquisitions
and Divestiture,” to the consolidated financial statements for further
discussion.
Other income decreased in 2022 compared with 2021 primarily due to gains
from strategic investments related to our corporate venture program in the
prior year.
46
Net income from unconsolidated investees decreased in 2022 compared with
2021 primarily due to a decrease in 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.
Tax Matters
The following table presents our income tax provision and effective tax rate:
Year Ended December 31,
Percentage Change
2022
2021
2020
2022 vs. 2021 2021 vs. 2020
(in millions)
Income tax
provision
Effective tax
rate
$
352 $
347 $
279
1.4 %
24.4 %
23.9 %
22.6 %
23.0 %
For further discussion of our tax matters, see Note 17, “Income Taxes,” to the
consolidated financial statements.
NON-GAAP FINANCIAL MEASURES
In addition to disclosing results determined in accordance with U.S. GAAP,
we also provide 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
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 provides
investors with greater
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. In
addition, other companies, including companies in our industry, may calculate
such measures differently, which reduces their usefulness as comparative
measures. Investors should not rely on any single financial measure when
evaluating our business. This non-GAAP information should be considered as
supplemental in nature and is not meant as a substitute for our operating
results in accordance with U.S. GAAP. 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 ongoing operating performance.
We believe that excluding the following items from the non-GAAP net income
attributable to Nasdaq provides a more meaningful analysis of Nasdaq’s
ongoing operating performance and comparisons in Nasdaq’s performance
between periods:
• 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 and the relative operating performance of the businesses
between periods.
• Merger and strategic initiatives expense: We have pursued various strategic
initiatives and completed acquisitions and divestitures in recent years that
have resulted in expenses which would not have otherwise been incurred.
The frequency and the amount of such expenses vary significantly based on
the size, timing and complexity of the transaction. These expenses primarily
include integration costs, as well as legal, due diligence and other third-
party transaction costs.
• Restructuring charges: In 2022, following our September announcement to
realign our segments and leadership, we initiated a divisional alignment
program with a focus on realizing the full potential of this structure. In
2019, we initiated the transition of certain technology platforms to advance
our strategic opportunities as a technology and analytics provider and
continue
the realignment of certain business areas. See Note 20,
“Restructuring Charges,” to the consolidated financial statements for further
discussion of our 2022 divisional alignment program as well as our 2019
restructuring plan, which was completed in June 2021.
• Net income from unconsolidated investee: Our income on our investment in
OCC may vary significantly compared to prior periods due to the changes in
OCC's capital management policy. See “Equity Method Investments,” of
Note 6, “Investments,” to the consolidated financial statements for further
discussion.
47
• Other 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. For the year ended December 31, 2022,
other items include accruals related to a legal matter, included in general,
administrative and other expense in our Consolidated Statements of Income
and a regulatory matter offset by the release of $5 million in relation to the
reduction of the administrative fine issued by the SFSA both recorded in
regulatory expense in our Consolidated Statements of Income. For the years
ended December 31, 2022 and 2021 other items also include a loss on
extinguishment of debt, included in general, administrative and other
expense in our Consolidated Statements of Income and net gains and losses
from strategic investments entered into through our corporate venture
program, included in other income in our Consolidated Statements of
Income. For the year ended December 31, 2021, other items included a
charge related to an administrative fine imposed by the SFSA. The 2022 and
2021 SFSA charges associated with the default that occurred in 2018, are
included in regulatory expense in our Consolidated Statements of Income.
See “Nasdaq Commodities Clearing Default,” of Note 15, “Clearing
Operations,” to the consolidated financial statements for further discussion.
For the year ended December 31, 2021, other items also included a net gain
on divestiture of businesses, which represents our pre-tax net gain of $84
million on the sale of our U.S. Fixed Income business.
• Significant tax items: The non-GAAP adjustment to the income tax
provision for the years ended December 31, 2022 and 2021 primarily
includes the tax impact of each non-GAAP adjustment. In addition, for the
year ended December 31, 2021, the non-GAAP adjustment to the income
tax provision includes adjustments related to return-to-provision and a prior
year tax benefit.
The following tables present 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
Non-GAAP adjustments:
Amortization expense of
acquired intangible assets
Merger and strategic initiatives
expense
Restructuring charges
Net income from unconsolidated
investee
Regulatory matters
Provision for notes receivable
Extinguishment of debt
Net gain on divestiture of
business
Charitable donations
Other
Total non-GAAP adjustments
Total non-GAAP tax
adjustments
Total non-GAAP adjustments,
net of tax
Non-GAAP net income
attributable to Nasdaq
Year Ended December 31,
2022
2021
2020
(in millions, except per share amounts)
$
1,125
$
1,187
$
933
153
82
15
(29)
1
—
16
—
—
27
265
(66)
199
170
87
31
(52)
33
—
33
(84)
—
(71)
147
(61)
86
103
33
48
(70)
(6)
6
36
—
17
14
181
(83)
98
$
1,324
$
1,273
$
1,031
U.S. GAAP effective tax rate
Total adjustments from non-
GAAP tax rate
Non-GAAP effective tax rate
23.9 %
22.6 %
23.0 %
0.1 %
24.0 %
1.7 %
24.3 %
3.0 %
26.0 %
Weighted-average common shares
outstanding for diluted earnings
per share
U.S. GAAP diluted earnings per
share
Total adjustments from non-
GAAP net income
Non-GAAP diluted earnings per
share
$
48
497.9
505.1
500.7
$
2.26
$
2.35
$
1.86
0.40
0.17
0.20
2.66
$
2.52
$
2.06
LIQUIDITY AND CAPITAL RESOURCES
Cash and Cash Equivalents
Historically, we have funded our operating activities and met our
commitments through cash generated by operations, augmented by the
periodic issuance of debt. Currently, our cost and availability of funding
remain healthy. We continue to prudently assess our capital deployment
strategy
investments, debt
repayments, and shareholder return activity, including share repurchases and
dividends.
through balancing acquisitions,
internal
In the near term, we expect that our operations and the availability under our
revolving credit facility 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, the current
portion of long-term debt, and commercial paper, can fluctuate from month to
month. Working capital (calculated as current assets less current liabilities)
was $(231) million as of December 31, 2022, compared with $(449) million as
of December 31, 2021, an increase of $218 million. The increase was
primarily driven by a decrease in short-term debt and increases in cash and
cash equivalents and receivables, net, partially offset by increases in Section
31 fees payable to the SEC and deferred revenue and decreases in other
current assets and financial investments.
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;
• credit rating downgrades, which could limit our access to additional debt;
• a significant decrease in the market price of our common stock; and
• volatility or disruption in the public debt and equity markets.
The following table summarizes our financial assets:
Cash and cash equivalents
Financial investments
Total financial assets
$
$
December 31, 2022
December 31, 2021
(in millions)
502 $
181
683 $
393
208
601
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,
2022, our cash and cash equivalents of $502 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, 2022 increased $109 million from December 31, 2021.
Repatriation of Cash
Our cash and cash equivalents held outside of the U.S. in various foreign
subsidiaries totaled $275 million as of December 31, 2022 and $266 million as
of December 31, 2021. The remaining balance held in the U.S. totaled $227
million as of December 31, 2022 and $127 million as of December 31, 2021.
Unremitted earnings of certain subsidiaries outside of the U.S. are used to
finance our international operations and are considered to be indefinitely
reinvested.
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 and
cash equivalents
Net increase (decrease) in cash and cash
equivalents and restricted cash and cash
equivalents
Cash and cash equivalents, restricted cash
and cash equivalents at beginning of period
Cash and cash equivalents, restricted cash
and cash equivalents at end of period
Reconciliation of Cash, Cash Equivalents and
Restricted Cash and Cash Equivalents
Cash and cash equivalents
Restricted cash and cash equivalents
Restricted cash and cash equivalents (default
funds and margin deposits)
Total
$
$
$
$
Year Ended December 31,
2022
2021
2020
(in millions)
1,706 $
49
1,036
1,083 $
(2,653)
1,418
1,252
(122)
1,910
(1,293)
(331)
353
1,498
5,496
(483)
5,979
6,994 $
5,496 $
502 $
22
6,470
6,994 $
393 $
29
5,074
5,496 $
3,393
2,586
5,979
2,745
37
3,197
5,979
49
We have adjusted the presentation of the 2020 opening and ending amounts of
cash, cash equivalents, and restricted cash and cash equivalents in our
consolidated statements of cash flows to include restricted cash and cash
equivalents related to the default funds and margin deposits. See Note 2,
“Summary of Significant Accounting Policies,” to the consolidated financial
statements for further discussion of this adjustment.
Net Cash Provided by Operating Activities
Net cash provided by operating activities primarily consists of net income
adjusted for certain non-cash items such as: depreciation and amortization
expense of property and equipment; amortization expense of acquired finite-
lived intangible assets; expense associated with share-based compensation;
deferred income taxes; expense associated with extinguishment of debt; net
gain on divestiture of business; and net income from unconsolidated investees.
Net cash provided by operating activities is also impacted by the effects of
changes in operating assets and liabilities such as: accounts receivable and
deferred revenue which are impacted by the timing of customer billings and
related collections from our customers; accounts payable and accrued
expenses due to timing of payments; accrued personnel costs, which are
impacted by employee performance targets and the timing of payments related
to employee bonus incentives; and Section 31 fees payable to the SEC, which
is impacted by the changes in SEC fee rates and the timing of collections from
customers and payments to the SEC.
Net cash provided by operating activities increased $623 million for the year
ended December 31, 2022 compared with the same period in 2021. The
increase was primarily driven by Section 31 fees payable to the SEC due to
higher SEC fee rates in 2022 and cash payments made in the second quarter of
2021 related to the acquisition of Verafin, including a tax obligation paid on
behalf of Verafin of $221 million and a cash payment of $102 million, the
release of which was subject to certain employment-related conditions
following the closing of the acquisition of Verafin. During the fourth quarter
of 2022, the remaining amount of the $102 million was accelerated and paid to
the eligible former Verafin employees. The remaining change was primarily
due to other fluctuations in our working capital.
Net Cash Provided by (Used in) Investing Activities
Net cash provided by investing activities for the year ended December 31,
2022 primarily related to net proceeds from sales and redemptions of
investments related to default funds and margin deposits of $211 million and
proceeds of $33 million from other investing activities, partially offset by
purchases of property and equipment of $152 million and $41 million cash
used for acquisitions, net of cash and cash equivalents acquired.
Net cash used in investing activities for the year ended December 31, 2021
primarily related to $2,430 million of cash used for acquisitions, net of cash
and cash equivalents acquired, primarily $221 million of cash acquired that
was utilized to satisfy an acquisition-related tax obligation on behalf of
Verafin, $163 million of purchases of property and equipment, net purchases
of investments related to default funds and margin deposits of $132 million,
other investing activities of $87 million, and $31 million of net purchases of
securities, partially offset by proceeds from the divestiture of a business, net of
cash divested of $190 million.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the year ended December 31,
2022 primarily related to an increase in default funds and margin deposits of
$2,440 million, proceeds of $541 million from the issuance of long-term-debt
and proceeds of $238 million from the issuances of our commercial paper, net,
partially offset by $1,097 million related to the repayment of our 2022 and
2024 Notes, $383 million of dividend payments to our shareholders, $325
million of repurchases of common stock pursuant to the ASR agreement and
$308 million in other repurchases of common stock.
Net cash provided by financing activities for the year ended December 31,
2021 primarily related to an increase in default funds and margin deposits of
$2,330 million, proceeds of $826 million from the issuances of long-term-debt
and utilization of credit commitment and $420 million of proceeds from
issuances of commercial paper, net, partially offset by repayment of
borrowings under our credit commitment and debt obligations of $804
million, $475 million of repurchases pursuant to the ASR agreement, $468
million in other repurchases of common stock, $350 million of dividend
payments to our shareholders and a $33 million payment for debt
extinguishment costs.
See Note 4, “Acquisitions and Divestiture,” to the consolidated financial
statements for further discussion of our acquisitions and divestiture.
See Note 9, “Debt Obligations,” to the consolidated financial statements for
further discussion of our debt obligations.
See “ASR Agreement,” “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 ASR
agreement, share repurchase program and cash dividends paid on our common
stock.
50
Financial Investments
Other Capital Requirements
Our financial investments totaled $181 million as of December 31, 2022 and
$208 million as of December 31, 2021. Of these securities, $161 million as of
December 31, 2022 and $162 million December 31, 2021, 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.
Regulatory Capital Requirements
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, 2022,
our required regulatory capital of $125 million was comprised of highly rated
European government debt securities
in financial
investments in the Consolidated Balance Sheets.
that are
included
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, 2022, other required regulatory capital of $10 million, primarily related to
Nasdaq Central Securities Depository, was primarily invested in European
government debt securities that are included in financial investments in the
Consolidated Balance Sheets and cash, which is included in restricted cash
and cash equivalents in the Consolidated Balance Sheets.
Equity and dividends
Stock Split Effected in the Form of a Stock Dividend
On August 26, 2022, we effected a 3-for-1 stock split of the Company's
common stock in the form of a stock dividend to shareholders of record as of
August 12, 2022. The par value per share of our common stock remains $0.01
per share. All references made with respect to a number of shares or per share
amounts throughout this Annual Report on Form 10-K have been retroactively
adjusted to reflect the stock split.
Broker-Dealer Net Capital Requirements
Share Repurchase Program
Our broker-dealer subsidiaries, Nasdaq Execution Services, NFSTX, LLC,
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. As of December 31, 2022, the combined required minimum net
capital totaled $1 million and the combined excess capital totaled $18 million,
substantially all of which is held in cash and cash equivalents in the
Consolidated Balance Sheets. The required minimum net capital is included in
restricted cash and cash equivalents in the Consolidated Balance Sheets.
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, 2022, our required regulatory capital of $34 million was
primarily invested in European mortgage bonds and Icelandic government
bonds that are included in financial investments in the Consolidated Balance
Sheets and cash, which is included in restricted cash and cash equivalents in
the Consolidated Balance Sheets.
See “Share Repurchase Program,” of Note 12, “Nasdaq Stockholders’ Equity,”
to the consolidated financial statements for further discussion of our share
repurchase program.
ASR Agreement
See “ASR Agreement,” of Note 12, “Nasdaq Stockholders’ Equity,” to the
consolidated financial statements for further discussion of our ASR
agreement.
Cash Dividends on Common Stock
The following table presents our quarterly cash dividends paid per common
stock:
share
outstanding
common
our
on
First quarter
Second quarter
Third quarter
Fourth quarter
Total
2022
2021
0.18
0.20
0.20
0.20
0.78
$
$
0.16
0.18
0.18
0.18
0.70
$
$
See “Cash Dividends on Common Stock,” of Note 12, “Nasdaq Stockholders’
Equity,” to the consolidated financial statements for further discussion of the
dividends.
51
Debt Obligations
The following table summarizes our debt obligations by contractual maturity:
Maturity Date
December 31, 2022
December 31, 2021
Short-term debt:
Commercial paper
2022 Notes
2024 Notes
December 2022
June 2024
Total short-term debt
Long-term debt - senior unsecured notes:
2022 Credit
Facility
2026 Notes
2029 Notes
2030 Notes
2031 Notes
2033 Notes
2040 Notes
2050 Notes
2052 Notes
Total long-term debt
Total debt obligations
December 2027
June 2026
March 2029
February 2030
January 2031
July 2033
December 2040
April 2050
March 2052
$
$
$
$
(in millions)
664 $
—
—
664 $
(5)
498
637
637
644
653
644
486
541
4,735 $
5,399 $
420
598
499
1,517
(4)
498
676
676
643
694
644
486
—
4,313
5,830
In the table above, the 2024 Notes were reclassified to short-term debt as of
March 31, 2022, and were repaid in April 2022.
In December 2022, Nasdaq amended and restated the 2020 Credit Facility
with a new maturity date of December 16, 2027. In addition to the 2022 Credit
Facility, we also have other credit facilities primarily to support our Nasdaq
Clearing operations in Europe, as well as to provide a cash pool credit line for
one subsidiary. These credit facilities, which are available in multiple
currencies, totaled $184 million as of December 31, 2022 and $212 million as
of December 31, 2021 in available liquidity, none of which was utilized.
As of December 31, 2022, 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.
Contractual Obligations and Contingent Commitments
Nasdaq has contractual obligations to make future payments under debt
obligations by contract maturity, operating lease payments, and other
obligations. The following table summarizes material cash requirements for
known contractual and other obligations as of December 31, 2022, and the
estimated timing thereof.
(in millions)
Debt obligation by
contractual maturity
Operating lease obligations
Purchase obligations
Total
In the table above:
Payments Due by Period
Total
<1 year
1-3 years
3-5 years
5+ years
$
$
7,188 $
665
453
8,306 $
765 $
77
86
928 $
224 $
142
104
470 $
685 $
110
91
886 $
5,514
336
172
6,022
• Debt obligations by contractual maturity include both principal and interest
obligations. As of December 31, 2022, an interest rate of 4.4% was used to
compute the amount of the contractual obligations for interest on the 2022
Credit Facility. All other debt obligations were primarily calculated on a
365-day basis at the contractual fixed rate multiplied by the aggregate
principal amount as of December 31, 2022. See Note 9, “Debt Obligations,”
to the consolidated financial statements for further discussion.
• Operating lease obligations represent our undiscounted operating lease
liabilities as of December 31, 2022, as well as legally binding minimum
lease payments for leases signed but not yet commenced. See Note 16,
“Leases,” to the consolidated financial statements for further discussion of
our leases.
• Purchase obligations primarily represent minimum outstanding obligations
due under software license agreements. The balance as of December 31,
2022 is primarily comprised of our multi-year AWS partnership contract,
which replaces our previous shorter term contracts, including those with no
minimum spend commitment, and is not expected to increase our overall
spend footprint with AWS over the life of the contract, based on projected
growth and expansion of our existing AWS-based solutions.
Off-Balance Sheet Arrangements
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 18, “Commitments, Contingencies and Guarantees,” to the
consolidated financial statements for further discussion of:
◦ Guarantees issued and credit facilities available;
◦ Other guarantees;
◦ Routing brokerage activities;
◦ Legal and regulatory matters; and
◦ Tax audits.
52
Quantitative and Qualitative Disclosures About Market Risk
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.
Financial Investments
As of December 31, 2022, our investment portfolio was primarily comprised
of highly rated European government debt securities, which pay a fixed rate of
interest. These securities are subject to interest rate risk and the fair value of
these securities will decrease if market interest rates increase. If market
interest rates were to increase immediately and uniformly by a hypothetical
100 basis points from levels as of December 31, 2022, the fair value of this
portfolio would decline by $3 million.
Debt Obligations
As of December 31, 2022, the majority of our debt obligations were fixed-rate
obligations. Interest rates on certain tranches of notes are subject to adjustment
to the extent our debt rating is downgraded below investment grade, as further
discussed in Note 9, “Debt Obligations,” to the consolidated financial
statements. 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 borrowings under our 2022 Credit Facility, as this facility has a
variable interest rate. We are also exposed to changes in interest rates as a
result of the amounts outstanding from the sale of commercial paper under our
commercial paper program, which have variable interest rates. As of
December 31, 2022, we had principal amounts outstanding of $664 million of
commercial paper and no amounts outstanding under our 2022 Credit Facility.
A hypothetical 100 basis points increase in interest rates on our outstanding
commercial paper would
interest expense by
approximately $7 million based on borrowings as of December 31, 2022.
increase our annual
We may utilize interest rate swap agreements to achieve a desired mix of
variable and fixed rate debt.
Foreign Currency Exchange Rate Risk
We are subject to foreign currency exchange rate risk. Our primary
transactional exposure to foreign currency denominated revenues less
transaction-based expenses and operating income for the years ended
December 31, 2022 and 2021 are presented in the following tables:
Euro
Swedish
Krona
Other Foreign
Currencies
U.S. Dollar
Total
(in millions, except currency rate)
Year Ended December 31, 2022
Average foreign
currency rate to
the U.S. dollar
1.054
0.099
#
N/A
N/A
Percentage of
revenues less
transaction-
based expenses
Percentage of
operating
income
6.2 %
5.1 %
4.1 %
84.6 %
100.0 %
10.1 %
(2.8)%
(10.6)%
103.3 %
100.0 %
Impact of a 10%
adverse
currency
fluctuation on
revenues less
transaction-
based expenses
Impact of a 10%
adverse
currency
fluctuation on
operating
income
$
(22)
$
(18)
$
(15)
$
—
$
(55)
$
(16)
$
(4)
$
(17)
$
—
$
(37)
Euro
Swedish
Krona
Other Foreign
Currencies
U.S. Dollar
Total
(in millions, except currency rate)
Year Ended December 31, 2021
Average foreign
currency rate to
the U.S. dollar
1.183
0.117
#
N/A
N/A
Percentage of
revenues less
transaction-
based expenses
Percentage of
operating
income
7.1 %
6.2 %
4.9 %
81.8 %
100.0 %
10.4 %
(4.6)%
(9.1)%
103.3 %
100.0 %
Impact of a 10%
adverse
currency
fluctuation on
revenues less
transaction-
based expenses
Impact of a 10%
adverse
currency
fluctuation on
operating
income
$
(24)
$
(21)
$
(17)
$
—
$
(62)
$
(15)
$
(7)
$
(13)
$
—
$
(35)
____________
# Represents multiple foreign currency rates.
N/A Not applicable.
53
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. The financial statements of
these subsidiaries are translated into U.S. dollars for consolidated reporting
using a current rate of exchange, with net gains or losses recorded in
accumulated other comprehensive loss within stockholders’ equity in the
Consolidated Balance Sheets.
Our primary exposure to net assets in foreign currencies as of December 31,
2022 is presented in the following table:
Net Assets
Impact of a 10% Adverse
Currency Fluctuation
$
Swedish Krona
British Pound
Norwegian Krone
Canadian Dollar
Australian Dollar
Euro
(in millions)
2,941 $
155
150
107
99
53
294
15
15
11
10
5
In the table above, Swedish Krona includes goodwill of $2,153 million and
intangible assets, net of $495 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. For our investment portfolio, our 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,
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
leaving Nasdaq Execution Services susceptible
thereby
clearinghouse officially accepts the trade for novation, Nasdaq Execution
Services is legally removed from trade execution risk. However, Nasdaq has
membership obligations to NSCC independent of Nasdaq 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.
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 large, highly rated financial institutions,
highly rated government debt
instruments and other creditworthy
counterparties.
54
• 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 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 with short
dated maturities of high quality sovereign debt (for example, European
government and U.S. Treasury securities), central bank certificates and
multilateral development bank debt instruments.
• 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
multilateral development bank debt instruments.
Critical Accounting Policies and Estimates
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 in the consolidated financial
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
Market technology revenues
As part of our market technology product offering, within our Marketplace
Technology business, we enter into certain 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 predominantly 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
to measure progress toward satisfying our performance obligation. Incurred
costs represent work performed, which corresponds with, and thereby depicts,
the transfer of control to the customer.
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. Revenue and cost
estimates for our long-term contracts are reviewed and reassessed at least
quarterly. 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.
Due to the significance of judgment in the estimation process, as discussed
above, changes in assumptions and estimates may adversely or positively
affect financial performance in future periods.
For further discussion related to recognition of these revenues, see “Revenue
From Contracts with Customers - Revenue Recognition - Marketplace
Technology,” of Note 2, “Summary of Significant Accounting Policies,” to the
consolidated financial statements.
55
Goodwill, Indefinite-Lived Intangible Assets and Related Impairment
Testing
Assets acquired and liabilities assumed in connection with our acquisitions are
recorded at their estimated fair values. 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 recognize specifically identifiable intangibles, such as
customer relationships, technology, exchange and clearing registrations, trade
names and licenses when a specific right or contract is acquired. Goodwill and
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 as of October 1 and more frequently whenever
events or changes in circumstances indicate that the fair value of the asset may
be less than its carrying amount, 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.
In September 2022, we announced a new organizational structure which aligns
our businesses more closely with the foundational shifts that are driving the
evolution of the global financial system. Our four previous reportable
segments, Market Services, Corporate Platforms, Investment Intelligence and
Market Technology have been changed to align with our new corporate
structure that includes three segments: Market Platforms, Capital Access
Platforms and Anti-Financial Crime. Under ASC 350-20, “Intangibles
Goodwill and Other,” when a company reorganizes its reporting structure, an
impairment test must be performed both before and after the change, and
goodwill must be reassigned to reporting units. Accordingly, goodwill was
reassigned based on relative fair value of each reporting unit.
We perform our goodwill impairment test at the reporting unit level. For 2022,
we performed the goodwill impairment test under our previous organizational
structure: Market Services segment, the two businesses comprising the
Corporate Platforms segment: Listing Services and Corporate Solutions, the
Investment Intelligence segment, and the Market Technology segment, which
represented our five reporting units. We also performed the test under our
current organization structure, which includes three reporting units: Market
Platforms segment, Capital Access Platforms segment and Anti-Financial
Crime segment.
When testing goodwill and indefinite-lived intangible assets 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 or
indefinite-lived intangible asset is less than their respective carrying amounts
as the basis to determine if it is necessary to perform a quantitative
impairment test. If we choose not to complete a qualitative assessment, or if
the initial assessment indicates that it is more likely than not that the carrying
amount of a reporting unit or the carrying amount of an indefinite-lived
intangible asset exceeds their respective estimated fair values, a quantitative
test is required. Our decision to perform a qualitative impairment assessment
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 or the indefinite-lived intangible
asset’s fair value over their respective carrying amounts at the last quantitative
assessment date, and the amount of time in between quantitative fair value
assessments.
In performing a quantitative impairment test, we compare the fair value of
each reporting unit and indefinite-lived intangible asset with their respective
carrying amounts. The fair value of each reporting unit is estimated using a
combination of a discounted cash flow valuation, which incorporates
assumptions regarding future growth rates, terminal values, and discount rates,
as well as guideline public company valuations, which incorporates 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. 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. If the carrying
amounts of the reporting unit or the indefinite-lived intangible asset exceed
their respective fair values, an impairment charge is recognized in an amount
equal to the difference, limited to the total amount of goodwill allocated to
that reporting unit or the total carrying value of the indefinite-lived intangible
asset.
The following table presents the balances of goodwill for our reportable
segments pre-segment realignment at the time of our 2022 annual impairment
test:
Market Technology
Investment Intelligence
Corporate Platforms
Market Services
56
October 1, 2022
(in millions)
2,122
2,256
471
3,097
7,946
$
$
The following table presents the balances of goodwill for our reportable
segments post segment realignment at the time of our 2022 annual impairment
test. The carrying value of goodwill was reassigned to our new reportable
segments based on a relative fair value allocation approach.
Market Platforms
Capital Access Platforms
Anti-Financial Crime
October 1, 2022
(in millions)
2,819
4,122
1,005
7,946
$
$
In 2022 and 2021, we elected to perform a quantitative impairment test for
goodwill and indefinite-lived intangible assets. In conducting the quantitative
assessment, we determined that the fair value of our goodwill for each of our
reporting units and the fair value of our indefinite-lived intangible assets
sufficiently exceed their respective carrying amounts. As a result, there were
no goodwill or indefinite-lived intangible assets impairment charges recorded
in any of those years.
Although we believe our estimates of fair value are reasonable, the
determination of certain valuation inputs is subject 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
and of our indefinite-lived intangible assets would be adversely impacted,
potentially leading to an impairment in the future that could materially affect
our operating results.
Subsequent to our annual impairment test, no indications of impairment were
identified.
Other Long-Lived Assets and Related Impairment
We review our other long-lived assets, such as finite-lived intangible assets,
property and equipment, and operating lease assets 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. 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.
There were no material finite-lived intangible assets impairment charges in
2022 and 2020. We recorded an impairment charge of $14 million in 2021
related to a finite-lived intangible asset for customer relationships associated
with the wind down of a previous acquisition included in depreciation and
amortization expense in the Consolidated Statements of Income.
We recorded pre-tax, non-cash property and equipment asset impairment
charges of $8 million in 2022, $4 million in 2021 and $14 million in 2020.
The asset impairment charges in 2022 and 2020 primarily related to
capitalized software that was retired and are included in restructuring charges
in the Consolidated Statements of Income. See Note 20, “Restructuring
Charges,” to the consolidated financial statements for a discussion of these
plans.
No material impairments were recorded to reduce the carrying value of our
other long-lived assets during 2022, 2021 or 2020.
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 revenues and expenses. 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.
57
Recent Accounting Pronouncements Not Yet Adopted
Management’s Report on Internal Control Over Financial Reporting
We have considered all recent accounting pronouncements and have
concluded that no accounting pronouncements that have not yet been adopted
would have a material impact on our financial position or results of
operations.
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
Nasdaq’s consolidated financial statements, including Consolidated Balance
Sheets as of December 31, 2022 and 2021, Consolidated Statements of
Income for the years ended December 31, 2022, 2021 and 2020, Consolidated
Statements of Comprehensive Income for the years ended December 31, 2022,
2021 and 2020, Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 2022, 2021 and 2020, Consolidated
Statements of Cash Flows for the years ended December 31, 2022, 2021 and
2020 and notes to our consolidated financial statements, together with a report
thereon of Ernst & Young LLP, dated February 23, 2023, are attached hereto
as pages F-1 through F-44 and incorporated by reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure controls and procedures. Nasdaq’s management, with the
participation of Nasdaq’s Chief Executive Officer, and Executive Vice
President 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 Chief Executive Officer
and Executive Vice President and Chief Financial Officer, have concluded
that, as of the end of such period, Nasdaq’s disclosure controls and procedures
are effective.
Changes in 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, 2022 that have materially affected, or
are reasonably likely to materially affect, Nasdaq’s internal control over
financial reporting.
is responsible for
Management
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.
the preparation and
integrity of
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, 2022, based on criteria established in
the Committee of
Internal Control—Integrated Framework
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, 2022,
our internal control over financial reporting is effective.
issued by
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.
58
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, 2022, 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, 2022,
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, 2022 and 2021, the related
consolidated statements of income, comprehensive income, changes in
stockholders’ equity and cash flows for each of the three years in the period
ended December 31, 2022, and the related notes and our report dated February
23, 2023 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.
New York, New York
February 23, 2023
/s/ Ernst & Young LLP
59
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
Not applicable.
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
“Director Nominees” 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-Delinquent
Section 16(a) Reports” 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 “Operating with Integrity” in
the Proxy Statement. Information about Nasdaq’s nomination procedures,
Audit & Risk Committee and Audit & Risk 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 “Director
Nominees” and “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 “Director Compensation”
and “Executive 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 and ESPP Information
Nasdaq’s Equity Plan provides for the issuance of our equity securities to all
employees and directors as part of their compensation plan.
In addition, in jurisdictions where participation in the ESPP is permitted, all
our employees are eligible. Employees may purchase shares of our common
stock at a 15% discount to the lesser of the closing price of our common stock
on (i) the first trading day of the offering period or (ii) the last trading day of
the offering period. Offering periods under the ESPP are six months in
duration. As of December 31, 2022, all our employees are eligible to
participate.
The Equity Plan and the ESPP have been previously approved 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, 2022.
Number of
shares
to be issued upon
exercise of
outstanding
options, warrants
and rights(a)
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)
1,420,323 $
41.79
38,534,312
—
1,420,323 $
—
41.79
—
38,534,312
Plan Category
Equity compensation
plans approved by
stockholders
Equity compensation
plans not approved
by stockholders
Total
In the table above:
• The number of shares to be issued upon exercise of outstanding options,
warrants and rights include only the number of shares to be issued upon
exercise of outstanding options, warrants and rights. As of December 31,
2022, we also had 6,347,055 shares to be issued upon vesting of outstanding
restricted stock and PSUs.
• The number of shares remaining available for future issuance under equity
compensation plans (excluding shares reflected in column (a) includes
26,430,038 shares of common stock that may be awarded pursuant to the
Equity Plan and (b) 12,104,274 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”
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 “Director
Nominees” in the Proxy Statement.
the Proxy Statement.
in
60
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 & Risk Annual Evaluation and 2023
Selection of the Independent Auditor” in the Proxy Statement.
PART IV
Item 15. Exhibits and 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
Share Purchase Agreement, dated as of November 18, 2020,
by and among Osprey Acquisition Corporation, a wholly
owned subsidiary of Nasdaq, Verafin Holdings Inc., certain
shareholders of Verafin (the “Sellers”), and Shareholder
Representative Services LLC, solely in its capacity as the
representative of the Sellers (incorporated herein by reference
to Exhibit 2.2 to the Annual Report on Form 10-K for the year
ended December 31, 2020 filed on February 23, 2021).†
Amendment to Share Purchase Agreement, dated as of
February 11, 2021, by and among Osprey Acquisition
Corporation, a wholly owned subsidiary of Nasdaq, Verafin
Holdings Inc., certain shareholders of Verafin (the “Sellers”),
and Shareholder Representative Services LLC, solely in its
capacity as the representative of the Sellers (incorporated
herein by reference to Exhibit 2.3 to the Annual Report on
Form 10-K for the year ended December 31, 2020 filed on
February 23, 2021).
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).
2.1
2.2
3.1
3.1.1
3.1.2
3.1.3
3.1.4
3.2
4.1
4.2
4.2.1
4.3
4.3.1
4.4
4.4.1
61
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 September 8, 2015).
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 July 20, 2022).
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).
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).
First Amendment to Nasdaq Stockholders’ Agreement, dated
as of December 14, 2022, between Nasdaq, Inc. and Investor
AB (incorporated herein by reference to Exhibit 4.1 to the
Current Report on Form 8-K filed on December 16, 2022).
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
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).
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).
Sixth Supplemental Indenture, dated as of April 1, 2019,
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
by reference to Exhibit 4.2 to the Form 8-A filed on April 1,
2019).
Seventh Supplemental Indenture, dated February 13, 2020,
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 Exhibit 4.2 to the Company’s Form 8-A
filed on February 13, 2020).
Eighth Supplemental Indenture, dated April 28, 2020, by and
between Nasdaq, 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 April
28, 2020).
Ninth Supplemental Indenture, dated December 21, 2020, by
and between Nasdaq, 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
December 21, 2020).
62
4.14
4.15
4.16
4.17
Tenth Supplemental Indenture, dated December 21, 2020, by
and between Nasdaq, Inc. and Wells Fargo Bank, National
Association, as Trustee (incorporated herein by reference to
Exhibit 4.3 to the Current Report on Form 8-K filed on
December 21, 2020).
Eleventh Supplemental Indenture, dated December 21, 2020,
by and between Nasdaq, Inc. and Wells Fargo Bank, National
Association, as Trustee (incorporated herein by reference to
Exhibit 4.4 to the Current Report on Form 8-K filed on
December 21, 2020).
Twelfth Supplemental Indenture, dated July 30, 2021, by and
among Nasdaq, Inc., Wells Fargo Bank, National Association,
as Trustee and HSBC Bank USA, National Association, as
registrar and transfer agent (incorporated by reference to
Exhibit 4.2 to the Company’s 8-A filed on July 30, 2021).
Thirteenth Supplemental Indenture, dated as of March 7, 2022,
by and between Nasdaq, Inc. and Computershare Trust
Company, N.A. (as successor to Wells Fargo Bank, National
Association), as trustee (incorporated by reference to Exhibit
4.2 to the Company's Current Report on Form 8-K filed on
March 7, 2022).
4.18
Description of Securities.
10.1
10.2
10.3
10.4
10.5
10.6
Amended and Restated Board Compensation Policy, effective
on June 16, 2021 (incorporated herein by reference to Exhibit
10.1 to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 2021 filed on August 4, 2021).*
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).*
Nasdaq, Inc. Equity Incentive Plan (as amended and restated
as of April 24, 2018) (incorporated herein by reference to
Exhibit 10.1 to the Form S-8 filed on May 25, 2018).*
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 10.1
to the Quarterly Report on Form 10-Q for the quarter ended
June 30, 2022 filed on August 3, 2022).*
Form of Nasdaq Restricted Stock Unit Award Certificate
(directors) (incorporated herein by reference to Exhibit 10.2 to
the Quarterly Report on Form 10-Q for the quarter ended June
30, 2022 filed on August 3, 2022).*
10.7
10.8
10.9
10.10
10.10.1
10.11
10.12
10.13
10.14
10.15
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,
2019 filed on August 5, 2019).*
Form of Nasdaq Three-Year Performance Share Unit
Agreement (incorporated herein by reference to Exhibit 10.3
to the Quarterly Report on Form 10-Q for the quarter ended
June 30, 2022 filed on August 3, 2022).*
Form of Nasdaq Continuing Obligations Agreement
(incorporated by reference to Exhibit 10.9 to the Company’s
Annual Report on Form 10-K for the year ended December
31, 2021 filed on February 23, 2022).
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).*
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).*
Nasdaq, Inc. Deferred Compensation Plan (incorporated by
reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed on June 16, 2022).*
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 Agreement between Nasdaq and Adena
Friedman, made and entered into on November 19, 2021 and
effective as of January 1, 2022 (incorporated by reference to
Exhibit 10.14 to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021 filed on February 23,
2022).*
Nonqualified Stock Option Award Certificate to Adena T.
Friedman from Nasdaq, Inc. in connection with grant made on
January 3, 2022 (incorporated by reference to Exhibit 10.15 to
the Company’s Annual Report on Form 10-K for the year
ended December 31, 2021 filed on February 23, 2022).*
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
11
Employment Agreement by and between Nasdaq, Inc. and
Bradley J. Peterson, dated October 1, 2020 (incorporated
herein by reference to Exhibit 10.17 to the Annual Report on
Form 10-K for the year ended December 31, 2020 filed on
February 23, 2021).*
Employment Agreement by and between Nasdaq, Inc. and
Bradley J. Peterson, dated June 22, 2022 (incorporated herein
by reference to Exhibit 10.5 to the Quarterly Report on Form
10-Q for the quarter ended June 30, 2022 filed on August 3,
2022).
Employment Offer Letter by and between Nasdaq, Inc. and
Michelle Daly (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed on May 3, 2021).*
Nasdaq Change in Control Severance Plan for Executive Vice
Presidents and Senior Vice Presidents, effective November 26,
2013, as amended December 6, 2022.*
Credit Agreement, dated as of December 21, 2020, among
Nasdaq, Inc., the various lenders from time to time party
thereto and, Bank of America, N.A., as administrative agent
and issuing bank (incorporated herein by reference to Exhibit
10.1 to the Current Report on Form 8-K filed on December 21,
2020).
LIBOR Transition Amendment, dated as of October 19, 2021
by and among Nasdaq, Inc. and Bank of America, N.A., as
administrative agent (incorporated herein by reference to
Exhibit 10.23 to the Annual Report on Form 10-K for the year
ended December 31, 2021 filed on February 23, 2022).
Amended and Restated Credit Agreement, dated as of
December 16, 2022, among Nasdaq, Inc., the various lenders
and issuing bank party thereto and Bank of America, N.A., as
administrative agent (incorporated herein by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed on
December 16, 2022).
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).
Verafin Holdings Inc. Amended and Restated Management
Incentive Plan*
Verafin Holdings Inc. Amended and Restated Management
Incentive Plan Award Agreement, by and between Verafin
Solutions ULC and Brendan Brothers, dated as of January 11,
2023*
Verafin Holdings Inc. Amended and Restated Management
Incentive Plan Award Agreement, by and between Verafin
Solutions ULC and Jamie King, dated as of October 18, 2022*
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).
63
21.1
23.1
24.1
31.1
31.2
32.1
101
List of all subsidiaries.
Consent of Ernst & Young LLP.
Powers of Attorney.
Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).
Certification of Executive Vice President 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.
The following materials from the Nasdaq, Inc. Annual Report
on Form 10-K for the year ended December 31, 2022,
formatted in iXBRL (Inline eXtensible Business Reporting
Language): (i) Consolidated Balance Sheets as of December
31, 2022 and December 31, 2021; (ii) Consolidated Statements
of Income for the years ended December 31, 2022, 2021 and
2020 (iii) Consolidated Statements of Comprehensive Income
for the years ended December 31, 2022, 2021 and 2020; (iv)
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 2022, 2021 and 2020; (v)
Consolidated Statements of Cash Flows for the years ended
December 31, 2022, 2021 and 2020; and (vi) notes to
consolidated financial statements.
104
Cover Page Interactive Data File, formatted in iXBRL and
contained in Exhibit 101.
____________
* Management contract or compensatory plan or arrangement.
† Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-
K.
(b) Exhibits:
See Item 15(a)(3) above.
(c) 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.
Item 16. Form 10-K Summary
None.
64
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
* Pursuant to Power of Attorney
By:
Name:
Title:
*
Thomas A. Kloet
Director
*
John D. Rainey
Director
*
Johan Torgeby
Director
*
Toni Townes-Whitley
Director
*
Alfred W. Zollar
Director
/s/ John A. Zecca
John A. Zecca
Attorney-in-Fact
SIGNATURES
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 23, 2023.
Nasdaq, Inc.
(Registrant)
By:
Name:
Title:
Date:
/s/ Adena T. Friedman
Adena T. Friedman
Chief Executive Officer
February 23, 2023
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 23, 2023.
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
/s/ Adena T. Friedman
Adena T. Friedman
Chief Executive Officer and Chair of the Board
/s/ Ann M. Dennison
Ann M. Dennison
Executive Vice President and Chief Financial Officer
/s/ Michelle Daly
Michelle Daly
Senior Vice President, Controller and Principal
Accounting Officer
*
Michael R. Splinter
Director
*
Melissa M. Arnoldi
Director
*
Charlene T. Begley
Director
*
Steven D. Black
Director
*
Essa Kazim
Director
65
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 (PCAOB ID 42)
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F-1
F-2
F-4
F-5
F-6
F-7
F-8
F-9
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the
current period audit of the financial statements that was communicated or
required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which
it relates.
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, 2022 and 2021, the related
consolidated statements of income, comprehensive income, changes in
stockholders’ equity and cash flows for each of the three years in the period
ended December 31, 2022, 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, 2022 and 2021, and the results of its operations
and its cash flows for each of the three years in the period ended December
31, 2022, 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, 2022, 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 23, 2023 expressed an unqualified
opinion thereon.
Basis for Opinion
the responsibility of
These financial statements are
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.
F-2
Description
of the
Matter
contracts
containing
statements,
financial
into
Market Technology Revenue Recognition
As described in Notes 2 and 3 to the
consolidated
the
long-term market
Company enters
technology contracts with customers
to
develop customized
technology solutions,
license the right to use software, and provide
support and other services which results in
multiple
these
performance obligations. The Company
recognized $562 million of Marketplace
Technology revenue for
the year ended
December 31, 2022. Of this amount, a portion
relates to market technology contracts where
the Company allocates the contract transaction
price to each performance obligation using its
best estimate of the standalone selling price of
each distinct good or service in the respective
instances
technology contract. In
market
where standalone selling price is not directly
observable, such as when a product or service
the Company
is not
separately,
determines
selling price
predominantly through an expected cost plus a
margin approach. The Company recognizes
revenue over time using costs incurred to date
relative to total estimated costs at completion
to measure progress toward satisfying the
performance obligation. Revenue recognized
subject to such estimation was $75 million for
the year ended December 31, 2022.
standalone
sold
the
the significant management
Auditing the Company’s calculation of the
standalone selling price and timing of revenue
recognition was complex and involved a high
degree of subjective auditor judgment because
of
judgment
the estimates. The
required
is based on an
standalone selling price
estimate of
total project costs, ongoing
monitoring of completion of performance
obligations and establishing margins for goods
or services where a standalone selling price is
not directly observable.
to develop
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and
tested the operating effectiveness of controls over the
Company's processes with respect to estimates that impact the
timing and measurement of revenue recognition. For
example, we tested controls over the allocation of contract
transaction price
including
management’s review of the estimated margin used when
applying the cost plus an estimated margin to determine the
standalone selling price. We also evaluated the design and
tested the operating effectiveness of controls over the
completeness and accuracy of the data utilized to measure the
estimate and recognize the revenue in the appropriate period.
to performance obligations,
requests, and
the standalone selling price and
We performed substantive audit procedures that included,
among other things, evaluating the significant assumptions
and the accuracy and completeness of the underlying data
used in management’s calculation. Specifically, we inspected
certain new customer agreements signed during the year,
tested management’s
including change
determination of
its
allocation to performance obligations in accordance with the
cost plus a margin approach, including comparing the margin
assumptions to actual margins earned on completed contracts.
We also tested the accuracy of the revenue recognized in the
current period by inspecting reports relating to the hours
recorded on a project. We evaluated the adequacy of the
Company’s disclosures in Notes 2 and 3 to the consolidated
financial statements related to market technology revenue
recognition.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1986.
New York, New York
February 23, 2023
F-3
Nasdaq, Inc.
Consolidated Balance Sheets
(in millions, except share and par value amounts)
December 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
Restricted cash and cash equivalents
Default funds and margin deposits (including restricted cash and cash equivalents of $6,470 and $5,074,
respectively)
Financial investments
Receivables, net
Other current assets
Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Operating lease assets
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
Operating lease liabilities
Other non-current liabilities
Total liabilities
Commitments and contingencies
Equity
Nasdaq stockholders’ equity:
Common stock, $0.01 par value, 900,000,000 shares authorized, shares issued: 513,157,630 at December 31, 2022
and 520,256,817 at December 31, 2021; shares outstanding: 491,592,491 at December 31, 2022 and 500,038,905
at December 31, 2021
Additional paid-in capital
Common stock in treasury, at cost: 21,565,139 shares at December 31, 2022 and 20,217,912 shares at December
31, 2021
Accumulated other comprehensive loss
Retained earnings
Total Nasdaq stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
F-4
$
$
$
$
502 $
22
7,021
181
677
201
8,604
532
8,099
2,581
444
608
20,868 $
185 $
243
243
357
122
7,021
664
8,835
4,735
456
452
226
14,704
5
1,445
(515)
(1,991)
7,207
6,151
13
6,164
20,868 $
393
29
5,911
208
588
294
7,423
509
8,433
2,813
366
571
20,115
185
62
252
329
115
5,911
1,018
7,872
4,812
406
386
234
13,710
5
1,949
(437)
(1,587)
6,465
6,395
10
6,405
20,115
Revenues:
Market Platforms
Capital Access Platforms
Anti-Financial Crime
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
Net gain on divestiture of business
Other income
Net income from unconsolidated investees
Income before income taxes
Income tax provision
Net income
Net loss attributable to noncontrolling interests
Net income attributable to Nasdaq
Per share information:
Basic earnings per share
Diluted earnings per share
Cash dividends declared per common share
Nasdaq, Inc.
Consolidated Statements of Income
(in millions, except per share amounts)
Year Ended December 31,
2022
2021
2020
4,225 $
1,684
306
11
6,226
4,048 $
1,568
231
39
5,886
(2,092)
(552)
3,582
(2,168)
(298)
3,420
1,003
140
207
104
125
51
258
33
82
15
2,018
1,564
7
(129)
—
2
31
1,475
352
1,123
2
1,125 $
2.28 $
2.26 $
0.78 $
938
144
186
109
85
57
278
64
87
31
1,979
1,441
1
(125)
84
81
52
1,534
347
1,187
—
1,187 $
2.38 $
2.35 $
0.70 $
4,179
1,287
116
43
5,625
(2,028)
(694)
2,903
786
137
151
107
142
39
202
24
33
48
1,669
1,234
4
(101)
—
5
70
1,212
279
933
—
933
1.89
1.86
0.65
$
$
$
$
$
See accompanying notes to consolidated financial statements.
F-5
Nasdaq, Inc.
Consolidated Statements of Comprehensive Income
(in millions)
Net income
Other comprehensive income (loss):
Foreign currency translation gains (losses)
Income tax benefit (expense)
Foreign currency translation, net
(1)
Employee benefit plan adjustment gains (losses)
Employee benefit plan income tax provision
Employee benefit plan, net
Total other comprehensive income (loss), net of tax
Comprehensive income
Comprehensive loss attributable to noncontrolling interests
Comprehensive income attributable to Nasdaq
____________
(1)
Primarily relates to the tax effect of unrealized gains and losses on Euro denominated notes.
Year Ended December 31,
2022
2021
2020
$
1,123 $
1,187 $
(375)
(32)
(407)
5
(2)
3
(176)
(42)
(218)
(1)
—
(1)
(404)
719
2
721 $
(219)
968
—
968 $
$
933
269
49
318
—
—
—
318
1,251
—
1,251
See accompanying notes to consolidated financial statements.
F-6
Consolidated Statements of Changes in Stockholders' Equity
(in millions)
Nasdaq, Inc.
Year Ended December 31,
2022
2021
2020
Shares
500
$
5
Shares
495
$
5
Shares
495
$
5
(5)
(6)
3
—
1
(1)
1,949
(308)
(325)
106
—
23
1,445
(437)
(78)
(515)
(1,587)
(404)
(1,991)
6,465
—
1,125
(383)
7,207
6,151
10
3
13
(9)
(7)
3
—
19
(1)
2,544
(468)
(475)
90
1
257
1,949
(376)
(61)
(437)
(1,368)
(219)
(1,587)
5,628
—
1,187
(350)
6,465
6,395
3
7
10
(6)
—
3
—
3
—
2,629
(222)
—
87
2
48
2,544
(336)
(40)
(376)
(1,686)
318
(1,368)
5,027
(12)
933
(320)
5,628
6,433
—
3
3
Common stock
Additional paid-in capital
Beginning balance
(1)
Share repurchase program
ASR agreement
Share-based compensation
Stock option exercises, net
Other issuances of common stock, net
(2)
Ending balance
Common stock in treasury, at cost
Beginning balance
Other employee stock activity
Ending balance
Accumulated other comprehensive loss
Beginning balance
Other comprehensive income (loss)
Ending balance
Retained earnings
Beginning balance
Impact of adoption of ASU 2016-13
Net income attributable to Nasdaq
Cash dividends declared per common share
Ending balance
Total Nasdaq stockholders’ equity
Noncontrolling interests
Beginning balance
Net activity related to noncontrolling interests
Ending balance
Total Equity
492 $
6,164
500 $
6,405
495 $
6,436
____________
(1)
See “ASR Agreement,” of Note 12, “Nasdaq Stockholders’ Equity,” for further discussion.
In 2021, other issuances of common stock primarily related to shares accelerated and issued upon the sale of our U.S. Fixed Income business.
(2)
See accompanying notes to consolidated financial statements.
F-7
Nasdaq, Inc.
Consolidated Statements of Cash Flows
(in millions)
Year Ended December 31,
2022
2021
2020
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Share-based compensation
Deferred income taxes
Extinguishment of debt
Net gain on divestiture of business
Net income from unconsolidated investees
Other reconciling items included in net income
Net change in operating assets and liabilities, net of effects of acquisitions:
Receivables, net
Other assets
Accounts payable and accrued expenses
Section 31 fees payable to SEC
Accrued personnel costs
Deferred revenue
(1)
Other liabilities
(2)
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 business, net of cash divested
Proceeds from sale of investment securities
Acquisition of businesses, net of cash and cash equivalents acquired
Purchases of property and equipment
Investments related to default funds and margin deposits, net
Other investing activities
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from (repayments of) commercial paper, net
Repayments of debt and credit commitment
Payment of debt extinguishment cost
Proceeds from issuances of debt, net of issuance costs and utilization of credit commitment
Repurchases of common stock
ASR agreement
Dividends paid
Proceeds received from employee stock activity and other issuances
Payments related to employee shares withheld for taxes
Default funds and margin deposits
Other financing activities
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents
Cash and cash equivalents, restricted cash and cash equivalents at beginning of period
Cash and cash equivalents, restricted cash and cash equivalents at end of period
Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents
Restricted cash and cash equivalents
Restricted cash and cash equivalents (default funds and margin deposits)
Total
Supplemental Disclosure Cash Flow Information
Interest paid
Income taxes paid, net of refund
(1)
$
1,123 $
1,187 $
258
106
38
16
—
(31)
28
(101)
98
19
181
—
16
(45)
1,706
(322)
320
—
—
(41)
(152)
211
33
49
238
(1,097)
(16)
541
(308)
(325)
(383)
23
(78)
2,440
1
1,036
(1,293)
1,498
5,496
6,994 $
502 $
22
6,470
6,994 $
116 $
274 $
278
90
94
33
(84)
(52)
6
(6)
(140)
(17)
(162)
28
106
(278)
1,083
(316)
285
190
—
(2,430)
(163)
(132)
(87)
(2,653)
420
(804)
(33)
826
(468)
(475)
(350)
26
(61)
2,330
7
1,418
(331)
(483)
5,979
5,496 $
393 $
29
5,074
5,496 $
118 $
501 $
$
$
$
$
$
933
202
87
41
36
—
(70)
32
(167)
26
5
92
32
15
(12)
1,252
(283)
402
—
22
(157)
(188)
109
(27)
(122)
(391)
(1,468)
(36)
3,807
(222)
—
(320)
50
(40)
527
3
1,910
353
3,393
2,586
5,979
2,745
37
3,197
5,979
97
290
__________________________
(1)
In 2021, includes payment of an acquired tax liability related to the Verafin acquisition. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” for further discussion.
Includes purchases and proceeds from sales and redemptions related to the default funds and margin deposits of our clearing operations. For further information, see "Default Fund
(2)
Contributions and Margin Deposits," within Note 15, "Clearing Operations."
See accompanying notes to consolidated financial statements.
F-8
Nasdaq, Inc.
Notes to Consolidated Financial Statements
1. ORGANIZATION AND NATURE OF OPERATIONS
Nasdaq is a global technology company serving the capital markets and other
industries. Our diverse offerings of data, analytics, software and services
enable clients to optimize and execute their business vision with confidence.
In 2022, we announced a new organizational structure which aligns our
businesses more closely with the foundational shifts that are driving the
evolution of the global financial system. In order to amplify our strategy, we
aligned the Company more closely with evolving client needs. As a result, our
four previous business segments, Market Technology, Investment Intelligence,
Corporate Platforms and Market Services, have been changed to align with
our new corporate structure that now includes three business segments:
Capital Access Platforms, Market Platforms, and Anti-Financial Crime.
For further discussion of our businesses, see “Products and Services,” of “Item
1. Business.”
Market Platforms
Our Market Platforms segment includes our Trading Services and Marketplace
Technology businesses. Our Trading Services business primarily includes
revenues from equity derivatives trading, cash equity trading, Nordic fixed
income trading & clearing, Nordic commodities and U.S. Tape plans data. 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 certain countries where we operate
exchanges, we also provide clearing, settlement and central depository
services. In June 2021, we sold our U.S. Fixed Income business which
included an electronic platform for trading of U.S. Treasuries. See “2021
Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion.
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 addition to our trading and clearing services business as well as our carbon
market offering, we also announced our planned launch of a new digital assets
business to power the digital asset ecosystem in September 2022. The launch
underpins Nasdaq’s ambition
to advance and help facilitate broader
trusted and
institutional participation
institutional-grade solutions, focused on enhanced custody, liquidity and
integrity. Nasdaq Digital Assets is expected to initially develop an advanced
custody solution. Nasdaq’s offering is subject to regulatory approval in
applicable jurisdictions.
in digital assets by providing
Our Marketplace Technology business includes our trade management
services and our market technology businesses.
Trade management services provides market participants with a wide variety
of alternatives for connecting to and accessing our markets for a fee. 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 provide colocation 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 offerings between select data centers using millimeter wave and
microwave technology. In June 2022, we completed the wind-down of our
Nordic broker services business.
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 are utilized by leading markets in the U.S., Europe
and Asia as well as emerging markets in the Middle East, Latin America, and
Africa.
Capital Access Platforms
Our Capital Access Platforms segment includes our Data & Listing Services,
Index and Workflow & Insights businesses.
Our data business sells and distributes historical and real-time market data to
the sell-side, the institutional investing community, retail online brokers,
proprietary trading firms and other venues, as well as internet portals and data
distributors. Our data products can enhance transparency of market activity
within our exchanges and provide critical information to professional and non-
professional investors globally. Additionally, our Nasdaq Cloud Data Service
provides a flexible and efficient method of delivery for real-time exchange
data and other financial information.
Our listing services business operates in the U.S. and Europe on a variety of
listing platforms around the world to provide multiple global capital raising
solutions for public companies. Our main 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. In July 2021, we
contributed our NPM business, which was included in our Listing Services
business, to a standalone, independent company, of which we own the largest
minority interest, together with a consortium of third-party financial
institutions. The NPM business provides liquidity solutions for private
companies to enable employees, investors, and companies to execute
transactions.
F-9
As of December 31, 2022, there were 4,230 total listings on The Nasdaq Stock
Market, including 528 ETPs. The combined market capitalization was
approximately $19.3 trillion. In Europe, the Nasdaq Nordic and Nasdaq Baltic
exchanges, together with Nasdaq First North, were home to 1,251 listed
companies with a combined market capitalization of approximately $1.9
trillion.
Our Index business develops and licenses Nasdaq-branded indexes and
financial products. We also license cash-settled options, futures and options on
futures on our indexes. As of December 31, 2022, 379 ETPs listed on 26
exchanges in over 20 countries tracked a Nasdaq index and accounted for
$315 billion in AUM.
investment decisions, deploy
includes our analytics and corporate solutions
Workflow & Insights
businesses. Our analytics business provides asset managers, investment
consultants and institutional asset owners with information and analytics to
make data-driven
their resources more
productively, and provide liquidity solutions for private funds. Through our
eVestment and Solovis solutions, we provide a suite of cloud-based solutions
that help institutional investors and consultants conduct pre-investment due
diligence, and monitor their portfolios post-investment. The eVestment
platform also enables asset managers to efficiently distribute information
about their firms and funds to asset owners and consultants worldwide.
Through the Solovis platform, endowments, foundations, pensions and family
offices transform how they collect and aggregate investment data, analyze
portfolio performance, model and predict future outcomes, and share
meaningful portfolio insights with key stakeholders. The Nasdaq Fund
Network and Nasdaq Data Link are additional platforms in our suite of
investment data analytics offerings and data management tools.
Our corporate solutions business includes our Investor Relations Intelligence,
ESG Solutions and Governance Solutions products, which serve both public
and private companies and organizations. Our public company clients can be
companies listed on our exchanges or other U.S. and global exchanges. Our
private company clients include a diverse group of organizations ranging from
family-owned companies, government organizations, law firms, privately held
entities, and various non-profit organizations to hospitals and healthcare
systems. We help organizations enhance their ability to understand and expand
their global shareholder base, improve corporate governance, and navigate the
evolving ESG landscape through our suite of advanced technology, analytics,
reporting and consulting services. In June 2022, we acquired Metrio, a
provider of ESG data collection, analytics and reporting services based in
Montreal, Canada. We plan to integrate Metrio’s SaaS platform into our suite
of ESG solutions.
Anti-Financial Crime
Our Anti-Financial Crime segment provides anti-financial crime management
solutions on a cloud-based platform to help detect, investigate, and report
money laundering and financial fraud through Verafin, which was acquired in
February 2021. Our Anti-Financial Crime segment includes Nasdaq Trade
Surveillance, a SaaS solution designed for brokers and other market
participants to assist them in complying with market rules, regulations and
internal market surveillance policies; Nasdaq Market Surveillance, a market
surveillance solution for markets and regulators. See “2021 Acquisition,” of
Note 4, “Acquisitions and Divestiture,” for further discussion.
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
in
consolidation.
transactions have been eliminated
Certain prior year amounts have been reclassified to conform to the current
year presentation.
During the fourth quarter of 2021, we adjusted the presentation of cash and
cash equivalents held within default funds and margin deposits on the
consolidated statement of cash flows from operating activities, to present them
as restricted cash and cash equivalents with the associated changes being
included within cash flows from investing and financing activities. These
balances cannot be used to satisfy the Company's operating or other liabilities.
See Note 15, “Clearing Operations,” for further discussion of the default funds
and margin deposits.
Prior period amounts have also been adjusted to conform to current period
presentation. This immaterial adjustment had no impact on our previously
reported consolidated balance sheets, consolidated statements of income, or
consolidated statements of comprehensive income.
F-10
The table below presents a summary of the 2020 Statements of Cash Flows as
reported and as adjusted:
$
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Effect of exchange rate changes on cash,
cash equivalents, restricted cash and cash
equivalents
Net increase in cash, cash equivalents,
restricted cash and cash equivalents
Cash, cash equivalents, restricted cash and
cash equivalents at beginning of period
Cash, cash equivalents, restricted cash and
cash equivalents at end of period
Year Ended December 31, 2020
As Reported
Adjustment
(in millions)
Adjusted
1,252 $
(231)
1,383
16
2,420
362
— $
109
527
337
973
1,252
(122)
1,910
353
3,393
2,224
2,586
$
2,782 $
3,197 $
5,979
Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents
Restricted cash and cash equivalents
Restricted cash and cash equivalents
(Default funds and margin deposits)
2,745 $
37
$
— $
—
—
2,782 $
3,197
3,197 $
Total
$
Use of Estimates
2,745
37
3,197
5,979
In preparing our consolidated financial statements, we make assumptions,
judgments and estimates that can have a significant impact on our revenue,
operating income and net income, as well as on the value of certain assets and
liabilities in our consolidated balance sheets. At least quarterly, we evaluate
our assumptions, judgments and estimates, and make changes as deemed
necessary.
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.
Translation gains or losses resulting from translating our 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 $242 million as of December 31,
2022 and $109 million as of December 31, 2021. Cash equivalents are carried
at cost plus accrued interest, which approximates fair value due to the short
maturities of these investments.
Restricted Cash
Restricted cash and cash equivalents, which was $22 million as of December
31, 2022 and $29 million as of December 31, 2021, is restricted from
withdrawal due to a contractual or regulatory requirement or not available for
general use and as such is classified as restricted in the Consolidated Balance
Sheets. As of December 31, 2022 and 2021, restricted cash and cash
equivalents primarily includes funds held for regulatory capital for our trading
and clearing businesses.
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.
Receivables, net
Our receivables are concentrated with our member firms, market data
distributors, listed companies, investor relations intelligence, governance, anti-
financial crime and marketplace technology customers. Receivables are shown
net of allowance for credit losses. The allowance is maintained at a level that
management believes to be sufficient to absorb expected losses over the life of
our accounts receivable portfolio. The allowance is increased by the provision
for bad debts, which is included in general, administrative and other expense
in the Consolidated Statements of Income, and decreased by the amount of
charge-offs, net of recoveries.
F-11
The allowance is primarily based on an aging methodology. This method
applies loss rates based on historical loss information which is disaggregated
by business segment and, as deemed necessary, is adjusted for other factors
and considerations that could impact collectibility. Additionally, we consider
corporate default rate averages over an extended period as compared to the
period covered by our historical loss data and include an adjustment to
historical loss percentages for current conditions and expected future
conditions if necessary.
In circumstances where a specific customer’s inability to meet its financial
obligations is known (i.e., bankruptcy filings), we determine whether a
specific provision for bad debts is required. Accounts receivable are written-
off against the allowance when collection efforts cease. Due to changing
economic, business and market conditions, we review the allowance quarterly
and make changes to the allowance 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
allowance netted against receivables in the Consolidated Balance Sheets was
$15 million as of December 31, 2022, $17 million as of December 31, 2021
and $21 million as of December 31, 2020. The change in the balance in 2022
was immaterial.
In 2020 we adopted ASU 2016-13, which changed the impairment model for
certain financial instruments. We recorded a $12 million non-cash cumulative
effect adjustment to retained earnings on our opening Consolidated Balance
Sheets as of January 1, 2020 as a result of the adoption of this new standard.
Investments
Purchases and sales of investment securities are recognized on settlement date.
Financial Investments
Financial investments are comprised of trading 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, with changes in fair value included in other
income in the Consolidated Statements of Income.
Fair value 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
generally do not entail material subjectivity because the methodologies
employed use inputs observed from active markets. See “Fair Value
Measurements,” below for further discussion of fair value measures.
Equity Securities
Investments in equity securities with readily determinable fair values (other
than those accounted for under the equity method or those that result in
consolidation of the investee) are measured at fair value and any changes in
fair value are recognized in other income in the Consolidated Statements of
Income.
Equity investments without readily determinable fair values are accounted for
under the measurement alternative, under which investments 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 on a prospective basis. 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 share price from the
investee's latest financing round, the performance of the investee in relation to
its own operating targets, the investee's liquidity and cash position, 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, will recognize an
impairment loss in net income equal to the difference in the period the
impairment occurs. See Note 6, “Investments,” for further discussion of our
equity securities.
For the years ended December 31, 2022, 2021 and 2020, no material
adjustments were made to the carrying value of our 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.
Equity Method Investments
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 estimated pro-rata share of earnings or
losses each reporting 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
net income in the period the impairment occurs. See Note 6, “Investments,”
for further discussion of our equity method investments.
F-12
No impairments were recorded to reduce the carrying value of our equity
method investments in 2022, 2021 or 2020.
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, 2022 and 2021, the fair value amounts of our derivative
instruments were immaterial.
Net Investment Hedges
Net assets of our foreign subsidiaries are exposed to volatility in foreign
currency exchange rates. We may utilize net investment hedges to offset the
translation adjustment arising from re-measuring our investment in foreign
subsidiaries.
Our 2029, 2030 and 2033 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 increase or
decrease related to the remeasurement of the 2029, 2030, and 2033 Notes into
U.S. dollars is recorded in accumulated other comprehensive loss within
stockholders’ equity in the Consolidated Balance Sheets. See “2029 Notes,”
“2030 Notes,” and “2033 Notes” of Note 9, “Debt Obligations,” for further
discussion.
Property and Equipment, net
Property and equipment, including leasehold improvements, are carried at cost
less asset impairment charges and accumulated depreciation and amortization.
Depreciation and amortization are recognized using the straight-line method
over the estimated useful lives of the related assets, which range from 10 to 40
years for buildings and improvements, 3 to 5 years for data processing
equipment, and 5 to 10 years for furniture and equipment.
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.
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 5 to 10 years. Amortization of these costs is included in
depreciation and amortization expense in the Consolidated Statements of
Income.
Implementation costs incurred in a cloud computing arrangement that is a
service contract are capitalized as a prepaid asset, included in other assets in
our Consolidated Balance Sheets, and are amortized over the expected service
period in the relevant expense category in the Consolidated Statements of
Income.
Property and equipment are subject to impairment testing when events or
conditions 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, or for internal use software, the fair value of
the asset. 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.
See Note 7, “Property and Equipment, net,” for further discussion.
Leases
At inception, we determine whether a contract is or contains a lease. We have
operating leases which are primarily real estate leases for our U.S. and
European headquarters and for general office space. As of December 31,
2022, these leases have varying lease terms with remaining maturities ranging
from 2 to 14 years. Operating lease balances are included in operating lease
assets, other current liabilities, and operating lease liabilities in our
Consolidated Balance Sheets. We do not have any leases classified as finance
leases.
F-13
Operating lease assets represent our right to use an underlying asset for the
lease term and lease liabilities represent our obligation to make lease
payments arising from the lease. Operating lease assets and liabilities are
recognized at commencement date based on the present value of lease
payments over the lease term. Since our leases do not provide an implicit rate,
we use our incremental borrowing rate based on the estimated rate of interest
for collateralized borrowing over a similar term of the lease payments at
commencement date in determining the present value of lease payments. The
operating lease asset also includes any lease payments made and excludes
lease incentives. Our lease terms include options to extend or terminate the
lease when we are reasonably certain that we will exercise that option. Lease
expense for lease payments is recognized on a straight-line basis over the lease
term. Certain of our lease agreements include rental payments adjusted
periodically for inflation based on an index or rate. These payments are
included in the initial measurement of the operating lease liability and
operating lease asset. However, rental payments that are based on a change in
an index or a rate are considered variable lease payments and are expensed as
incurred.
We have lease agreements with lease and non-lease components, which are
accounted for 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 do not recognize lease
liabilities and operating lease assets for leases with a term of 12 months or
less. We recognize these lease payments on a straight-line basis over the lease
term. See Note 16, “Leases,” for further discussion.
Goodwill and Indefinite-Lived Intangible Assets
identifiable
intangibles, such as customer
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 recognize
relationships,
specifically
technology, exchange and clearing registrations, trade names and licenses
when a specific right or contract is acquired. Goodwill and 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 as of October 1 and more frequently whenever events or changes in
circumstances indicate that the fair value of the asset may be less than its
carrying amount, 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 and indefinite-lived intangible assets 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 or indefinite-lived intangible asset is less than their respective carrying
amounts as the basis to determine if it is necessary to perform a quantitative
impairment test. If we choose not to complete a qualitative assessment, or if
the initial assessment
indicates that it is more likely than not that the carrying amount of a reporting
unit or the carrying amount of an indefinite-lived intangible asset exceeds
their respective estimated fair values, a quantitative test is required.
In performing a quantitative impairment test, we compare the fair value of
each reporting unit and indefinite-lived intangible asset with their respective
carrying amounts. If the carrying amounts of the reporting unit or the
indefinite-lived intangible asset exceed their respective fair values, an
impairment charge is recognized in an amount equal to the difference, limited
to the total amount of goodwill allocated to that reporting unit or the total
carrying value of the indefinite-lived intangible asset.
There was no impairment of goodwill or indefinite-lived intangible assets for
the years ended December 31, 2022, 2021 and 2020. Future disruptions to our
business and events, such as prolonged economic weakness or unexpected
significant declines in operating results of any of our reporting units or
businesses, may result in goodwill or indefinite-lived intangible asset
impairment charges in the future.
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 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.
There were no material finite-lived impairment charges in 2022 and 2020. We
recorded pre-tax, non-cash finite-lived intangible assets impairment charges of
$14 million in 2021 related to a finite-lived intangible asset for customer
relationships associated with the wind down of a previous acquisition. In
addition, we also recorded pre-tax, non-cash property and equipment asset
impairment charges of $8 million in 2022, $4 million in 2021 and $14 million
in 2020.
F-14
Revenue Recognition and Transaction-Based Expenses
Revenue Recognition
Revenue From Contracts With Customers
Our revenue recognition policies under “Revenue from Contracts with
Customers (Topic 606),” are described in the following paragraphs.
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 are net of an allowance for
credit losses of $15 million as of December 31, 2022 and $17 million as of
December 31, 2021. 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 there is no significant
variable consideration. We do not have a material amount of revenues
recognized from performance obligations that were satisfied in prior periods.
We do not 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, the portion of transaction
price allocated to unsatisfied performance obligations is included in Note 3,
“Revenue From Contracts With Customers.” Our deferred revenue primarily
arises from contract liabilities related to our fees for annual and initial listings,
workflow & insights, marketplace technology and anti-financial crime
contracts. Deferred revenue is the only significant contract asset or liability as
of December 31, 2022. See Note 8, “Deferred Revenue,” for our discussion of
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 period. Sales
commissions for renewal contracts are deferred and amortized on a straight-
line basis over the related contractual renewal period. Amortization expense is
included in compensation and benefits expense in the Consolidated Statements
of Income. The balance of deferred costs and related amortization expense are
not material to our consolidated financial statements. Sales commissions are
expensed when incurred if contract durations are one year or less. Sales taxes
are excluded from transaction prices.
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.
Our primary revenue contract classifications are described below. Although
we may discuss additional revenue details in our “Management's Discussion
and Analysis of Financial Condition and Results of Operations,” the
categories below best represent
that depict similar economic
characteristics of the nature, amount, timing and uncertainty of our revenues
and cash flows.
those
Market Platforms
Trading 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.
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.
and Canadian cash equity trading, including for The Nasdaq Stock Market,
Nasdaq PSX and Nasdaq CXC, we credit a portion of the per share execution
charge to the market participant that provides the liquidity, and for Nasdaq BX
and Nasdaq CX2, 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 expenses 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-15
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 our
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.
U.S. Tape Plans
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. These revenues are presented on a net basis as all indicators of
principal versus agent reporting under U.S. GAAP have been considered in
analyzing the appropriate presentation of the revenue sharing. The following
are primary indicators of net reporting:
• We are the administrator for the UTP 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.
Marketplace Technology
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 colocation 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 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 twelve-month period since the customer
receives and consumes the benefit as Nasdaq provides the service. We also
offered broker services to financial participants in the Nordic market primarily
offering back office technology solutions. Revenues from broker services are
based on a fixed basic fee for licensing, maintenance and support and
development, and an incremental fee depending on the number of transactions.
Broker services revenues were generally billed and recognized monthly. As
previously disclosed, in January 2020, we commenced an orderly wind-down
of this broker services business. The wind-down was completed in the second
quarter of 2022.
Market Technology
Market technology revenues primarily consist of SaaS revenues, software,
license and support revenues, and change request 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. 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: (i) software license and installation
service and (ii) 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.
F-16
Capital Access Platforms
Data and Listings
Data revenues are earned from U.S. and European proprietary data products.
We earn revenues primarily based on the number of data subscribers and
distributors of our data. Data revenues are subscription-based and are
recognized on a monthly basis.
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 products (when a company qualifies to receive certain
complimentary IPO products 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 IPO complimentary 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 IPO
complimentary services performance obligation is recognized ratably over a
three-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 to listed companies based on their
number of outstanding shares at the end of the prior year and are recognized
ratably over the following twelve-month period since the customer receives
and consumes the benefit as Nasdaq provides the service. Annual fees are
charged to newly listed companies on a pro-rata basis, based on outstanding
shares at the time of listing and recognized over the remainder of the year.
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
twelve-month basis and are recognized ratably over the following twelve-
month period since the customer receives and consumes the benefit as Nasdaq
provides the service.
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 predominantly through an expected cost plus a margin
approach. For the years ended December 31, 2022, 2021 and 2020 we
recognized revenues of $75 million, $77 million and $90 million, respectively,
related to the contracts described above.
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 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.
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
to measure progress toward satisfying our performance obligation. Incurred
costs represent work performed, which corresponds with, and thereby depicts,
the transfer of control to the customer. Contract costs generally include labor
and direct overhead. For software support and update services, and for
subscription agreements which allow customers to connect to our servers to
access our software, we generally recognize revenue 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.
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.
F-17
Index
Anti-Financial Crime
are
generally
Transaction-based
We develop and license Nasdaq-branded indexes and financial products. We
also provide index data products and custom calculation services for third-
party clients. Revenues primarily include license fees from these branded
indexes and financial products in the U.S. and abroad. We primarily have two
types of license agreements: transaction-based licenses and asset-based
licenses.
renewable
licenses
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 consumes the benefit as Nasdaq provides the service. Asset-based licenses
are also generally renewable agreements. Customers are charged based on a
percentage of AUM for licensed products, per the 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.
Workflow & Insights
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 one to three years 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.
Our corporate solutions business includes our Investor Relations Intelligence,
ESG Services and Governance Solutions businesses, which serve both public
and private companies and organizations.
Corporate solutions revenues primarily include subscription and transaction-
based income from our investor relations intelligence and governance
solutions products and services. 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 in advance and the contract provides for automatic renewal. As
part of 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 when the service is provided.
Anti-Financial Crime revenues primarily consist of SaaS revenues. We enter
into subscription agreements which allow customers access to our cloud
platform, or in the case of certain surveillance customers, a connection to our
servers to access the software. Subscription agreements are generally three
years in term, payable in advance, with the option of automatic renewal for
some products. 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.
Other Revenues
Other revenues include revenues related to our Nordic broker services
business for which we completed the wind-down in June 2022, as well as
revenues associated with our U.S. Fixed Income business, which was sold in
June 2021. Prior to the closing of the transaction, these revenues were
included in our Market Platforms and Capital Access Platforms segments. See
“2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” to the
consolidated financial statements for further discussion of this divestiture.
Additionally, for the years ended December 31, 2021 and 2020, other revenues
include revenues associated with the NPM business which we contributed in
July 2021 to a standalone, independent company, of which we own the largest
minority interest, together with a consortium of third-party financial
institutions. Prior to July 2021, these revenues were included in our Capital
Access Platforms segment. For the twelve months ended December 31, 2022,
other revenues also include a transitional services agreement associated with a
divested business.
Earnings Per Share
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 income attributable to Nasdaq
by 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 restricted stock, PSUs, and
employee stock options. 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.
Shares which are considered contingently issuable are included in the
computation of dilutive earnings per share on a weighted average basis when
management determines the applicable performance criteria would have been
met if the performance period ended as of the date of the relevant
computation. See Note 13, “Earnings Per Share,” for further discussion.
F-18
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 restricted stock, PSUs, and
stock options. 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. The fair value of stock options are
estimated using the Black-Scholes option-pricing model.
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 in 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, divestitures, and other strategic
opportunities. These costs generally include integration costs, as well as legal,
due diligence and other third-party transaction costs.
Fair Value Measurements
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 orderly transaction
between market participants at the measurement date. When determining the
fair value 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.
F-19
Tax Matters
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
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.
Stock Split Effected in the Form of a Stock Dividend
On August 26, 2022, we effected a 3-for-1 stock split of the Company's
common stock in the form of a stock dividend to shareholders of record as of
August 12, 2022. The par value per share of our common stock remains $0.01
per share. All references made with respect to a number of shares or per share
amounts throughout this Annual Report on Form 10-K have been retroactively
adjusted to reflect the stock split.
Disaggregation of Revenue
The following tables summarize the disaggregation of revenue by major
product and service and by segment for the years ended December 31, 2022,
2021 and 2020:
Market Platforms
Trading Services, net
Marketplace Technology
Capital Access Platforms
Data & Listing Services
Index
Workflow & Insights
Anti-Financial Crime
Other revenues
Revenues less transaction-based
expenses
Year Ended December 31,
2022
2021
2020
(in millions)
$
1,019 $
562
1,037 $
545
729
486
469
306
11
680
459
429
231
39
932
525
574
324
389
116
43
$
3,582 $
3,420 $
2,903
Substantially all revenues from the Capital Access Platforms and Anti-
Financial Crime segments as well as our Marketplace Technology business
were recognized over time for the years ended December 31, 2022, 2021 and
2020. For the years ended December 31, 2022, 2021 and 2020 approximately
93.1%, 93.6%, and 94.8% respectively, of Trading Services revenues were
recognized at a point in time and 6.9%, 6.4% and 5.2%, respectively, were
recognized over time.
Subsequent Events
Contract Balances
We have evaluated subsequent events through the issuance date of this Annual
Report on Form 10-K.
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 are net of allowance for
doubtful accounts of $15 million as of December 31, 2022 and $17 million as
of December 31, 2021. 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
technology and listing services contracts, our performance obligations range
from three months to three years and there is no significant variable
consideration.
F-20
Deferred revenue is the only significant contract asset or liability as of
December 31, 2022. Deferred revenue represents consideration received that
is yet to be recognized as revenue for unsatisfied performance obligations.
Deferred revenue primarily represents our contract liabilities related to our
fees for Annual and Initial Listings, Workflow & Insights, Market Technology
and Anti-Financial Crime contracts. See Note 8, “Deferred Revenue,” for our
discussion on deferred revenue balances, activity, and expected timing of
recognition.
We do not have a material amount of revenue recognized from performance
obligations that were satisfied in prior periods. We do not provide disclosures
about transaction price allocated to unsatisfied performance obligations if
contract durations are less than one year. For our initial listings, the transaction
price allocated to remaining performance obligations is included in deferred
revenue. For our Market Technology, Anti-Financial Crime, and Workflow &
Insights contracts, the portion of transaction price allocated to unsatisfied
performance obligations is presented in the table below. To the extent
consideration has been received, unsatisfied performance obligations would be
included in the table below as well as deferred revenue.
The following table summarizes the amount of the transaction price allocated
to performance obligations that are unsatisfied, for contract durations greater
than one year, as of December 31, 2022:
Market Technology
Anti-Financial
Crime
Workflow &
Insights
Total
2023
2024
2025
2026
2027
2028+
Total
$
$
193 $
155
127
92
54
72
693 $
(in millions)
382 $
214
90
27
10
6
729 $
137 $
79
30
11
8
—
265 $
712
448
247
130
72
78
1,687
4. ACQUISITIONS AND DIVESTITURE
We completed the following acquisitions and divestiture in 2022 and 2021.
Financial results of each transaction are included in our consolidated financial
statements from the date of each acquisition.
2022 Acquisition
In June 2022, we acquired Metrio, a provider of ESG data collection, analytics
and reporting services based in Montreal, Canada. We plan to integrate
Metrio’s SaaS platform into our suite of ESG solutions. Metrio is part of our
Workflow & Insight business in our Capital Access Platforms segment.
2021 Divestiture
In June 2021, we sold our U.S. Fixed Income business, which was part of our
FICC business within our Market Platforms segment, to Tradeweb Markets
Inc. We recognized a pre-tax gain on the sale of $84 million, net of disposal
costs. The pre-tax gain was included in net gain on divestiture of business in
the Consolidated Statements of Income.
In connection with this sale, we issued approximately 6.2 million shares of
Nasdaq common stock. Nasdaq used the proceeds from the sale, available tax
benefits and working and clearing capital of this business, as well as other
sources of cash, to repurchase shares of Nasdaq common stock to reduce the
impact on earnings per share dilution from the sale. To facilitate these
repurchases, in June 2021, the board of directors authorized an increase to the
share repurchase program. These share repurchases were completed during the
second quarter of 2022. See “Share Repurchase Program,” of Note 12,
“Nasdaq Stockholders' Equity,” for further discussion.
2021 Acquisition
Acquisition of Verafin
In February 2021, we completed the acquisition of Verafin, a SaaS technology
provider of anti-financial crime management solutions that provides a cloud-
based platform to help detect, investigate, and report money laundering and
fraud, for an aggregate purchase price of $2.75 billion, subject to certain
adjustments. The $2.75 billion purchase price included a cash payment of
$102 million, reflected in cash from operating activities in our Consolidated
Statements of Cash Flows, the release of which was subject to certain
employment-related conditions following the closing of the transaction.
During the fourth quarter of 2022, the parties to the transaction agreed that the
remaining amount of the $102 million initial cash payment not yet paid would
be accelerated and paid to the eligible former Verafin employees. The
remaining expense was recorded as merger and strategic initiatives expense.
Verafin is part of our Anti-Financial Crime segment.
The amounts in the table below represent the final allocation of the 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 2021, we recorded a
measurement period adjustment of $9 million. This adjustment resulted in an
increase to both total net liabilities acquired and goodwill. This adjustment did
not result in an impact to our Consolidated Statements of Income. The
allocation of the purchase price for Verafin was finalized in the first quarter of
2022.
F-21
(in millions)
Methodology
Goodwill
Acquired Intangible Assets
Total Net Liabilities Acquired
Purchase Consideration
Intangible Assets
$
$
1,882
815
(46)
2,651
The following table presents the details of acquired intangible assets for
Verafin at the date of acquisition. Acquired intangible assets with finite lives
are amortized using the straight-line method.
The developed technology was 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 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 technology and discounted to present value.
Discount Rate
Customer
Relationships
Technology
Trade
Name
Total Acquired
Intangible
Assets
$
532
7.5 %
$
246
7.5 %
$
37
7.5 %
815
22 years
7 years
20 years
The discount rate used reflects 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 Verafin technology to be 7 years.
Intangible asset value
(in millions)
$
Discount rate used
Estimated average
useful life
Customer Relationships
Customer relationships represent
relationships with customers.
the non-contractual and contractual
Methodology
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 rate used reflects 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
utilized this rate as an input when discounting the cash flows. The resulting
discounted cash flows were then tax-effected at the applicable statutory rate.
For our acquisition of Verafin, 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 20 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.
Technology
As part of our acquisition of Verafin, we acquired developed technology.
Trade Name
As part of our acquisition of Verafin, we acquired a trade name. The trade
name is recognized in the industry and carries a reputation for quality. As
such, the reputation and positive recognition embodied in the trade name is a
valuable asset to Nasdaq.
Methodology
The Verafin trade name was valued using the income approach, specifically
the RFRM as discussed above in “Technology.”
Discount Rate
The discount rate used reflects the amount of risk associated with the
hypothetical cash flows for the trade name relative to the overall business as
discussed above in “Customer Relationships.”
Estimated Useful Life
We have estimated the useful life of the Verafin trade name to be 20 years and
our intention is to continue to use it in the branding of products.
Pro Forma Results and Acquisition-Related Costs
The consolidated financial statements for the years ended December 31, 2022,
2021 and 2020 include the financial results of the above acquisitions from the
date of the acquisitions. Pro forma financial results have not been presented
since these acquisitions 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.
F-22
5. GOODWILL AND ACQUIRED INTANGIBLE ASSETS
Acquired Intangible Assets
Goodwill
The following table presents the changes in goodwill by business segment
during the year ended December 31, 2022:
(in millions)
Market Platforms
Balance at December 31, 2021
Foreign currency translation adjustments
Balance at December 31, 2022
Capital Access Platforms
Balance at December 31, 2021
Goodwill acquired
Foreign currency translation and other adjustments
Balance at December 31, 2022
Anti-Financial Crime
Balance at December 31, 2021
Foreign currency translation adjustments
Balance at December 31, 2022
Total
Balance at December 31, 2021
Balance at Goodwill acquired
Foreign currency translation adjustments
Balance at December 31, 2022
$
$
$
$
$
$
$
$
3,129
(217)
2,912
4,292
40
(154)
4,178
1,012
(3)
1,009
8,433
40
(374)
8,099
In the table above, the December 31, 2021 balances reflect the revised
goodwill following our corporate realignment. As of October 1, 2022, as
required under ASC 350-20, the carrying value of goodwill was reassigned to
our new reportable segments based on a relative fair value allocation
approach.
As of December 31, 2022, the amount of goodwill that is expected to be
deductible for tax purposes in future periods is $35 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, 2022, 2021 and
2020; however, events such as prolonged economic weakness or unexpected
significant declines in operating results of any of our reporting units or
businesses, may result in goodwill impairment charges in the future.
The following table presents details of our total acquired intangible assets,
both finite- and indefinite-lived:
Finite-Lived Intangible Assets
Gross Amount
Technology
Customer relationships
Trade names and other
Foreign currency translation adjustment
Total gross amount
Accumulated Amortization
Technology
Customer relationships
Trade names and other
Foreign currency translation adjustment
Total accumulated amortization
Net Amount
Technology
Customer relationships
Trade names and other
Foreign currency translation adjustment
Total finite-lived intangible assets
Indefinite-Lived Intangible Assets
Exchange and clearing registrations
Trade names
Licenses
Foreign currency translation adjustment
Total indefinite-lived intangible assets
Total intangible assets, net
December 31, 2022
December 31, 2021
(in millions)
$
$
$
$
$
$
$
$
$
304 $
2,005
60
(209)
2,160 $
(97) $
(778)
(17)
120
(772) $
207 $
1,227
43
(89)
1,388 $
1,257 $
121
52
(237)
1,193 $
2,581 $
295
2,050
60
(143)
2,262
(54)
(711)
(11)
81
(695)
241
1,339
49
(62)
1,567
1,257
121
52
(184)
1,246
2,813
There was no impairment of indefinite-lived intangible assets for the years
ended December 31, 2022, 2021 and 2020. We recorded an impairment charge
of $14 million in 2021 related to a finite-lived intangible asset for customer
relationships associated with the wind down of a previous acquisition included
in depreciation and amortization expense in the Consolidated Statements of
Income. There were no material finite-lived impairment charges in 2022 and
2020.
F-23
The following table presents our amortization expense for acquired finite-
lived intangible assets:
Year Ended December 31,
2022
2021
(in millions)
2020
Amortization expense
$
153 $
170 $
103
The table below presents the estimated future amortization expense (excluding
the impact of foreign currency translation adjustments of $89 million as of
December 31, 2022) of acquired finite-lived intangible assets as of December
31, 2022:
2023
2024
2025
2026
2027
2028+
Total
(in millions)
159
153
151
148
147
719
1,477
$
$
6. INVESTMENTS
The following table presents the details of our investments:
December 31, 2022
December 31, 2021
Financial investments
Equity method investments
Equity securities
$
Financial Investments
(in millions)
181 $
390
86
208
363
67
Financial investments are comprised of trading securities, primarily highly
rated European government debt securities, of which $161 million as of
December 31, 2022 and $162 million as of December 31, 2021, are assets
primarily utilized to meet regulatory capital requirements, mainly for our
clearing operations at Nasdaq Clearing.
Equity Method Investments
We record our estimated pro-rata share of earnings or losses each reporting
period and record any dividends as a reduction in the investment balance. As
of December 31, 2022 and 2021, our equity method investments primarily
included our 40.0% equity interest in OCC.
The carrying amounts of our equity method investments are included in other
non-current assets in the Consolidated Balance Sheets. No impairments were
recorded for the years end December 31, 2022, 2021 and 2020.
Net income recognized from our equity interest in the earnings and losses of
these equity method investments, primarily OCC, was $31 million, $52
million and $70 million for the years ended December 31, 2022, 2021 and
2020, respectively. For the year ended December 31, 2022, lower equity
interest in the earnings of OCC, as compared to 2021, was primarily driven by
a reduction in the clearing fee rate that OCC charges its customers, partially
offset by elevated U.S. industry trading volumes.
Equity Securities
in
the Consolidated Balance Sheets. We elected
The carrying amounts of our equity securities are included in other non-
current assets
the
measurement alternative for substantially all of our equity securities as they do
not have a readily determinable fair value. No material adjustments were made
to the carrying value of our equity securities for the years ended December 31,
2022, 2021 and 2020. As of December 31, 2022 and December 31, 2021, our
equity securities primarily represent various strategic investments made
through our corporate venture program as well as investments acquired
through various acquisitions.
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 and impairment charges
Total property and equipment, net
Year Ended December 31,
2022
2021
(in millions)
786 $
305
1,091
(559)
532 $
735
288
1,023
(514)
509
$
$
Depreciation and amortization expense for property and equipment was $105
million for the year ended December 31, 2022, $108 million for the year
ended December 31, 2021, and $99 million for the year ended December 31,
2020. These amounts are included in depreciation and amortization expense in
the Consolidated Statements of Income.
We recorded pre-tax, non-cash property and equipment asset impairment
charges on capitalized software that was retired and accelerated depreciation
expense on certain assets as a result of a decrease in their useful life of
$8 million in 2022, $4 million in 2021 and $14 million in 2020. These charges
are included in restructuring charges in the Consolidated Statements of
Income. See Note 20, “Restructuring Charges,” for further discussion. There
were no other material impairments of property and equipment recorded in
2022, 2021 and 2020.
As of December 31, 2022 and 2021, we did not own any real estate properties.
F-24
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, 2022 are reflected in the following table:
Balance at
December 31, 2021 Additions Revenue Recognized
(in millions)
Adjustments
Balance at
December 31, 2022
Market Platforms:
Market
Technology
$
Capital Access Platforms:
Initial Listing
Annual Listings
Workflow &
Insights
Anti-Financial
Crime
Other
Total
$
In the above table:
36 $
28 $
(30) $
(5) $
145
2
159
81
25
448 $
25
3
166
106
12
340 $
(51)
(2)
(152)
(79)
(13)
(327) $
(3)
(1)
(1)
—
(3)
(13) $
29
116
2
172
108
21
448
• Additions primarily reflect deferred revenue billed in the current period, net
of recognition.
• Revenue recognized includes revenue recognized during the current period
that was included in the beginning balance.
• Adjustments reflect foreign currency translation adjustments.
• Other primarily includes deferred revenue from our Index business, data
contracts and non-U.S. listing of additional shares fees. These fees are
included in our Capital Access Platforms segment.
As of December 31, 2022, we estimate that our deferred revenue will be
recognized in the following years:
Fiscal year
ended:
2028+
Total
2023
2025
2027
2024
2026
(in millions)
Market Platforms:
Market
Technology
$
28 $
1 $ — $ — $ — $ — $
29
Capital Access Platforms:
Initial Listings
Annual Listings
Workflow &
Insights
Anti-Financial
Crime
Other
Total
$
40
2
169
106
12
357 $
30
—
3
2
5
41 $
20
—
—
—
3
23 $
17
—
—
—
1
18 $
8
—
—
—
—
1
—
—
—
—
8 $
1 $
116
2
172
108
21
448
The timing of recognition of deferred revenue related to certain market
technology contracts 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-25
9. DEBT OBLIGATIONS
Senior Unsecured Notes
The following table presents the changes in the carrying amount of our debt
obligations during the year ended December 31, 2022:
December 31,
2021
Additions
Payments,
Foreign
Currency
Translation and
Accretion
December 31, 2022
(in millions)
3,685 $
—
—
3,685 $
$
1,517 $
420 $
598
499
Short-term debt:
Commercial
paper
2022 Notes
2024 Notes
Total short-term
debt
$
Long-term debt - senior unsecured notes:
2026 Notes
2029 Notes
2030 Notes
2050 Notes
2031 Notes
2040 Notes
2033 Notes
2052 Notes
2022 Credit
Facility
498
676
676
486
643
644
694
—
(4)
—
—
—
—
—
—
—
541
(2)
(3,441) $
(598)
(499)
(4,538) $
—
(39)
(39)
—
1
—
(41)
—
1
664
—
—
664
498
637
637
486
644
644
653
541
(5)
Total long-term
debt
Total debt
obligations
$
$
4,313 $
539 $
(117) $
4,735
5,830 $
4,224 $
(4,655) $
5,399
In the table above, the 2024 Notes were reclassified to short-term debt as of
March 31, 2022.
The long-term debt senior unsecured notes in the table above, and discussion
below, are listed based on their issuance date.
Commercial Paper Program
Our U.S. dollar commercial paper program is supported by our 2022 Credit
Facility which provides liquidity support for the repayment of commercial
paper issued through this program. See “2022 Credit Facility” below for
further discussion. The effective interest rate of commercial paper issuances
fluctuates as short term interest rates and demand fluctuate. The fluctuation of
these rates may impact our interest expense.
In January 2022, we issued commercial paper to partially fund our ASR
agreement. See “ASR Agreement,” of Note 12, “Nasdaq Stockholders'
Equity.” In December 2022, we issued commercial paper to repay in full and
redeem our 2022 Notes. For further discussion see “2022 Notes” below. As of
December 31, 2022, we had $664 million outstanding under our commercial
paper program.
Our 2040 Notes were issued at par. All of our other outstanding senior
unsecured notes were issued at a discount. As a result of the discount, the
proceeds received from each issuance were less than the aggregate principal
amount. As of December 31, 2022, 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 through interest
expense over the life of the applicable notes. For our Euro denominated notes,
the “Payments, Foreign Currency Translation and Accretion” column also
includes the impact of foreign currency translation. Our senior unsecured
notes are general unsecured obligations which rank equally with all of our
existing and future unsubordinated obligations and 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. The senior unsecured notes may be redeemed by Nasdaq at any
time, subject to a make-whole amount.
Upon a change of control triggering event (as defined in the various
supplemental indentures governing the applicable notes), 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.
Early Extinguishment of 2024 Notes
In May 2014, Nasdaq issued the 2024 Notes, which paid interest semiannually
at a rate of 4.25% per annum. In April 2022, we primarily used the net
proceeds from the 2052 Notes to repay in full and redeem our 2024 Notes. For
further discussion see “2052 Notes” below. In connection with the early
extinguishment of the 2024 Notes, in April 2022 we recorded a pre-tax charge
of $16 million, which primarily includes a make-whole redemption price
premium.
2026 Notes
In June 2016, Nasdaq issued the 2026 Notes, which pay interest semi-annually
at a rate of 3.85% per annum until June 30, 2026. Such interest rate may vary
with Nasdaq’s debt rating, to the extent Nasdaq is downgraded below
investment grade, up to a rate not to exceed 5.85%.
2029 Notes
In April 2019, Nasdaq issued the 2029 Notes, which pay interest annually at a
rate of 1.75% per annum until March 28, 2029. Such interest rate may vary
with Nasdaq’s debt rating, to the extent Nasdaq is downgraded below
investment grade, up to a rate not to exceed 3.75%.
F-26
The 2029 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 $39 million noted in the “Payments, Foreign Currency Translation
and Accretion” column
the
remeasurement of the 2029 Notes into U.S. dollars and is recorded in
accumulated other comprehensive loss within Nasdaq's stockholders’ equity in
the Consolidated Balance Sheets as of December 31, 2022.
table above primarily
reflects
the
in
2030 Notes
In February 2020, Nasdaq issued the 2030 Notes, which pay interest annually
at a rate of 0.875% in arrears, which began on February 13, 2021.
The 2030 Notes were 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 $39 million noted in the “Payments, Foreign Currency Translation and
Accretion” column in the table above primarily reflects the remeasurement of
the 2030 Notes into U.S. dollars and is recorded in accumulated other
comprehensive loss within Nasdaq's stockholders’ equity in the Consolidated
Balance Sheets as of December 31, 2022.
2050 Notes
In April 2020, Nasdaq issued the 2050 Notes, which pay interest semi-
annually at a rate of 3.25% per annum until April 28, 2050. Such rate may
vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below
investment grade, up to a rate not to exceed 5.25%.
2022, 2031 and 2040 Notes
In December 2020, Nasdaq issued the 2022, 2031 and 2040 Notes. The net
proceeds were used to partially fund the acquisition of Verafin. For further
discussion of the acquisition of Verafin, see “2021 Acquisition,” of Note 4,
“Acquisitions and Divestiture.”
2022 Notes
In December 2022, we used the net proceeds from commercial paper to repay,
in full, the 2022 Notes. The 2022 Notes paid interest semi-annually in arrears,
which began on June 21, 2021.
2031 Notes
The 2031 Notes pay interest semi-annually in arrears, which began on January
15, 2021. The interest rate of 1.650% may vary with Nasdaq's debt rating, to
the extent Nasdaq is downgraded below investment grade, up to a rate not to
exceed 3.65%.
2040 Notes
The 2040 Notes pay interest semi-annually in arrears, which began on June
21, 2021. The interest rate of 2.500% may vary with Nasdaq's debt rating, to
the extent Nasdaq is downgraded below investment grade, up to a rate not to
exceed 4.50%.
2033 Notes
In July 2021, Nasdaq issued the 2033 Notes, which pay interest annually in
arrears, at a rate of 0.900%, beginning on July 30, 2022.
The 2033 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 $41 million noted in the “Payments, Foreign Currency Translation
and Accretion” column
the
remeasurement of the 2033 Notes into U.S. dollars and is recorded in
accumulated other comprehensive loss within Nasdaq stockholders’ equity in
the Consolidated Balance Sheets as of December 31, 2022.
table above primarily
reflects
the
in
2052 Notes
In March 2022, Nasdaq issued $550 million aggregate principal amount of
3.950% senior notes due in 2052, which pay interest semi-annually in arrears,
beginning on September 7, 2022. The interest rate of 3.950% may vary with
Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment
grade, up to a rate not to exceed 5.950%. The net proceeds from the 2052
Notes were $541 million after deducting the underwriting discount and
expenses of the offering. We used the net proceeds from the 2052 Notes to
redeem all of the 2024 Notes in April 2022.
Credit Facilities
2022 Credit Facility
In December 2020, Nasdaq entered into the 2020 Credit Facility, which
replaced a former credit facility and consists of a $1.25 billion five-year
revolving credit facility (with sublimits for non-dollar borrowings, swingline
borrowings and letters of credit). We amended and restated the 2020 Credit
Facility in December 2022 with a new maturity date of December 16, 2027.
Nasdaq intends to use funds available under the 2022 Credit Facility for
general corporate purposes and to provide liquidity support for the repayment
of commercial paper issued through the commercial paper program. Nasdaq is
permitted to repay borrowings under our 2022 Credit Facility at any time in
whole or in part, without penalty.
As of December 31, 2022, no amounts were outstanding on the 2022 Credit
Facility. The $(5) million balance represents unamortized debt issuance costs
which are being accreted through interest expense over the life of the credit
facility.
F-27
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 SOFR (or a successor rate to SOFR), the base rate (as defined in the
2022 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 0.100% to 0.250%, 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, 2022 and 2021.
The 2022 Credit Facility contains financial and operating covenants. Financial
covenants include 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 make certain
restricted payments. The facility also contains customary affirmative
covenants, including access to financial statements, notice of defaults and
certain other material events, maintenance of properties and insurance, and
customary events of default, including cross-defaults to our material
indebtedness.
The 2022 Credit Facility includes an option for Nasdaq to increase the
available aggregate amount by up to $750 million, subject to the consent of
the lenders funding the increase and certain other conditions.
Other Credit Facilities
Certain of our European subsidiaries have several other credit facilities, which
are available in multiple currencies, primarily to support our Nasdaq Clearing
operations in Europe, as well as to provide a cash pool credit line for one
subsidiary. These credit facilities, in aggregate, totaled $184 million as of
December 31, 2022 and $212 million as of December 31, 2021 in available
liquidity, none of which was utilized. Generally, these facilities each have a
one year term. The amounts borrowed under these various credit facilities bear
interest on the principal amount outstanding at a variable interest rate based on
a base rate (as defined in the applicable credit agreement), plus an applicable
margin. We are charged commitment fees (as defined in the applicable credit
agreement), 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, 2022 and 2021.
These facilities include customary affirmative and negative operating
covenants and events of default.
Debt Covenants
As of December 31, 2022, we were in compliance with the covenants of all of
our debt obligations.
10. RETIREMENT PLANS
Defined Contribution Savings Plan
We sponsor a 401(k) plan which is a voluntary defined contribution savings
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 is included in compensation and benefits
expense in the Consolidated Statements of Income:
Year Ended December 31,
2022
2021
(in millions)
2020
Savings Plan expense
$
17 $
14 $
14
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 in compensation and benefits expense in
the Consolidated Statements of Income:
Year Ended December 31,
2022
2021
(in millions)
2020
Retirement Plans expense
$
24 $
26 $
23
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.
As of December 31, 2022, the fair value of our U.S. defined-benefit pension
plan's assets was $79 million and the benefit obligation was $81 million. As a
result, the U.S. defined-benefit pension plan is underfunded by $2 million as
of December 31, 2022.
As of December 31, 2021, the fair value of our U.S. defined-benefit pension
plan's assets was $111 million and the benefit obligation was $112 million. As
a result, the U.S. defined-benefit pension plan was underfunded by $1 million
as of December 31, 2021.
F-28
Summary of Share-Based Compensation Expense
The following table presents the total share-based compensation expense
resulting from equity awards and the 15.0% discount for the ESPP for the
years ended December 31, 2022, 2021 and 2020, which is included in
compensation and benefits expense in the Consolidated Statements of Income:
Year Ended December 31,
2022
2021
2020
(in millions)
Share-based compensation
expense before income taxes
$
106 $
90 $
87
Common Shares Available Under Our Equity Plan
As of December 31, 2022, we had approximately 26.4 million shares of
common stock authorized for future issuance under our Equity Plan.
Restricted Stock
We grant restricted stock to most 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 to employees below the manager level generally vest 33.3% on the
first anniversary of the grant date, 33.3% on the second anniversary of the
grant date, and 33.3% on the third anniversary of the grant date. Restricted
stock awards granted to employees at or above the manager level generally
vest 33.3% on the second anniversary of the grant date, 33.3% on the third
anniversary of the grant date, and 33.3% on the fourth anniversary of the grant
date.
During 2022 and 2021, we did not make any contributions to our U.S.
defined-benefit pension plan. For our SERP and other post-retirement benefit
plans, the net underfunded liability was $28 million as of December 31, 2022
and $34 million as of December 31, 2021. The underfunded liability for the
above plans is included in accrued personnel costs and other non-current
liabilities in the Consolidated Balance Sheets. The plan assets of the Nasdaq
Benefit Plans are invested per target 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, 2022, accumulated other comprehensive
loss for the Nasdaq Benefit Plans was $23 million reflecting an unrecognized
net loss of $28 million, partially offset by an income tax benefit of $5 million,
primarily due to our pension plans.
Estimated Future Benefit Payments
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:
2023
2024
2025
2026
2027
2028 through 2032
$
$
8 $
7
7
8
8
33
71 $
(in millions)
5 $
3
3
2
2
7
22 $
— $
—
—
—
—
2
2 $
13
10
10
10
10
42
95
Nonqualified Deferred Compensation Plan
In June 2022, we established the Nasdaq, Inc. Nonqualified Deferred
Compensation Plan. This plan provides certain eligible employees with the
opportunity to defer a portion of their annual salary and bonus up to certain
approval limits. All deferrals and associated earnings are our general
unsecured obligations and were immaterial for the year ended December 31,
2022.
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
restricted stock (consisting of restricted stock units), PSUs and stock options.
For accounting purposes, we consider PSUs to be a form of restricted stock.
Generally, annual employee awards are granted on April 1st of each year.
F-29
Summary of Restricted Stock Activity
Three-Year PSU Program
The following table summarizes our restricted stock activity for the years
ended December 31, 2022, 2021 and 2020:
Restricted Stock
Number of Awards
Weighted-Average Grant
Date Fair Value
Unvested at December 31, 2019
Granted
Vested
Forfeited
Unvested at December 31, 2020
Granted
Vested
Forfeited
Unvested at December 31, 2021
Granted
Vested
Forfeited
Unvested at December 31, 2022
4,460,268 $
2,229,900
(1,498,071)
(274,944)
4,917,153 $
1,523,235
(1,624,809)
(416,559)
4,399,020 $
1,785,138
(1,525,442)
(278,203)
4,380,513 $
25.79
29.98
24.32
27.06
28.07
50.52
27.78
34.04
35.39
57.65
31.22
42.07
45.48
As of December 31, 2022, $111 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. Prior to April 1, 2020, we had
two performance-based PSU programs for certain officers, a one-year
performance-based program and a three-year cumulative performance-based
program that focuses on TSR. Effective April 1, 2020, to better align the
equity programs for eligible officers, the one-year performance-based program
was eliminated and all eligible officers now participate in the three-year
cumulative performance-based program. The performance periods are
complete for all PSUs granted under the one-year performance-based
program, and all shares underlying these PSUs have vested as of December
31, 2022.
One-Year PSU Program
The grant date fair value of PSUs under the one-year performance-based
program was 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 received a target grant of PSUs, but could have received 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 performance
period. Compensation cost was 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.
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 performance 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 award issuance 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 award issuance 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.
Grants of PSUs that were issued in 2020 with a three-year performance period
exceeded the applicable performance parameters. As a result, an additional
764,748 units above the original target were granted in the first quarter of
2023 and were fully vested upon issuance.
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 for the years ended December 31, 2022 and 2021:
Weighted-average risk free interest
rate
Expected volatility
Weighted-average grant date share
price
Weighted-average fair value at grant
date
$
$
Year Ended December 31,
2022
2021
2.61 %
30.04 %
60.55
63.68
$
$
0.33 %
30.30 %
51.88
72.75
In the table above, 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; and we use historic volatility for PSU awards issued under the three-
year PSU program, as implied volatility data could not be obtained for all the
companies in the peer groups used for relative performance measurement
within the program.
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.
F-30
Summary of PSU Activity
The following table summarizes our PSU activity for the years ended
December 31, 2022, 2021 and 2020:
PSUs
One-Year Program
Three-Year Program
Number of
Awards
Weighted-
Average Grant
Date Fair
Value
Number of Awards
Weighted-
Average Grant
Date Fair Value
Unvested at
December 31,
2019
Granted
Vested
Forfeited
Unvested at
December 31,
2020
Granted
Vested
Forfeited
Unvested at
December 31,
2021
Granted
Vested
Forfeited
Unvested at
December 31,
2022
951,753 $
80,340
(415,269)
(108,180)
508,644 $
—
(299,292)
(60,150)
149,202 $
—
(142,459)
(6,743)
26.96
28.06
26.03
27.47
27.78
—
27.66
27.76
28.01
—
28.02
27.85
2,392,353 $
960,984
(902,301)
(21,069)
2,429,967 $
1,081,707
(1,178,181)
(41,121)
2,292,372 $
1,495,092
(1,735,842)
(85,080)
32.77
35.81
27.19
32.75
36.04
58.66
38.95
47.43
45.01
45.66
32.57
52.27
— $
—
1,966,542 $
56.44
In the table above, the granted amount under the three-year program reflects
additional awards granted based on overachievement of performance
parameters.
As of December 31, 2022, total unrecognized compensation cost related to the
three-year PSU program is $44 million and is expected to be recognized over
a weighted-average period of 1.3 years.
A summary of stock option activity for the years ended December 31, 2022,
2021 and 2020 is as follows:
Number of Stock
Options
Weighted-
Average Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (in
years)
Aggregate
Intrinsic
Value (in
millions)
Outstanding at December
31, 2019
Exercised
Forfeited
Outstanding at December
31, 2020
Exercised
Forfeited
Outstanding at December
31, 2021
Granted
Outstanding at December
31, 2022
Exercisable at December 31,
2022
1,137,306 $
(255,585)
(1,662)
880,059 $
(73,227)
(381)
806,451 $
613,872
18.11
7.97
6.98
21.07
8.43
8.43
22.23
67.49
1,420,323 $
41.79
806,451 $
22.23
5.5 $
20
5.0 $
39
6.2 $
4.0 $
32
32
The net cash proceeds from the exercise of 73,227 stock options for the year
ended December 31, 2021 was $1 million. The net cash proceeds from the
exercise of 255,585 stock options for the year ended December 31, 2020 was
$2 million. The total pre-tax intrinsic value of stock options exercised was $3
million for the year ended December 31, 2021 and $9 million for the year
ended December 31, 2020.
As of December 31, 2022, the aggregate pre-tax intrinsic value of the
outstanding and exercisable stock options in the above table was $32 million
and $32 million, respectively, and represents the difference between our
closing stock price on December 31, 2022 of $61.35 and the exercise price,
times the number of shares that would have been received by the option holder
had the option holder exercised the stock options on that date. This amount
can change based on the fair market value of our common stock. As of
December 31, 2021, 0.8 million outstanding stock options were exercisable
and the weighted-average exercise price was $22.23.
Stock Options
ESPP
In January 2022, in connection with a new five year employment agreement,
our Chief Executive Officer received an aggregate of 613,872 performance-
based non-qualified stock options, which will vest as follows:
• 50% will vest contingent upon the achievement of certain performance
conditions; and
• 50% will vest five years after the grant date, subject to continued
employment through such date.
The fair value of stock options are estimated using the Black-Scholes option-
pricing model. These options expire 10 years after the date of grant. There
were no stock option awards granted for the years ended December 31, 2021
and 2020.
We have an ESPP under which approximately 12.1 million shares of our
common stock were available for future issuance as of December 31, 2022.
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.
F-31
Number of shares
purchased by employees
Weighted-average price
of shares purchased
Compensation expense
(in millions)
$
$
Year Ended December 31,
2022
2021
2020
591,820
605,274
663,369
The following is a summary of our share repurchase activity, excluding the
repurchases done through our ASR agreement described below, reported based
on settlement date, for the year ended December 31, 2022:
Year Ended December 31,
2022
43.54 $
41.41 $
31.93
8 $
7 $
5
Number of shares of common stock repurchased
Average price paid per share
Total purchase price (in millions)
$
$
5,465,595
56.26
308
12. NASDAQ STOCKHOLDERS' EQUITY
Common Stock
As of December 31, 2022, 900,000,000 shares of our common stock were
authorized, 513,157,630 shares were issued and 491,592,491 shares were
outstanding. As of December 31, 2021, 900,000,000 shares of our common
stock were authorized, 520,256,817 shares were issued and 500,038,905
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
shareholder 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 and are therefore not included in the common
stock in treasury balance. If treasury shares are reissued, they are recorded at
the average cost of the treasury shares acquired. We held 21,565,139 shares of
common stock in treasury as of December 31, 2022 and 20,217,912 shares as
of December 31, 2021, most of which are related to shares of our common
stock withheld for the settlement of employee tax withholding obligations
arising from the vesting of restricted stock and PSUs.
Share Repurchase Program
As of December 31, 2022, our board of directors authorized an increase to our
share repurchase program and the remaining aggregate authorized amount
under the existing share repurchase program was $650 million.
These repurchases may be made from time to time at prevailing market prices
in open market purchases, privately-negotiated transactions, block purchase
techniques, an accelerated share repurchase program or otherwise, as
determined by our management. The repurchases are primarily funded from
existing cash balances. The share repurchase program may be suspended,
modified or discontinued at any time, and has no defined expiration date.
In the table above, the number of shares of common stock repurchased
excludes an aggregate of 1,347,227 shares withheld upon the vesting of
restricted stock and PSUs for the year ended December 31, 2022.
As discussed above in “Common Stock in Treasury, at Cost,” shares
repurchased under our share repurchase program are currently retired and
cancelled.
ASR Agreement
In January 2022, we entered into an ASR agreement to repurchase $325
million of common stock. We received a total delivery of 5,629,161 shares of
common stock and completed the ASR program during the first quarter of
2022.
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, 2022 and December 31, 2021, no shares
of preferred stock were issued or outstanding.
Stock Split
See “Stock Split Effected in the Form of a Stock Dividend,” of Note 2, “Basis
of Presentation and Principles of Consolidation.”
Cash Dividends on Common Stock
During 2022, our board of directors declared and paid the following cash
dividends:
Declaration Date
Dividend Per
Common
Share
Record Date
Total Amount
Paid
(in millions)
January 26, 2022
April 20, 2022
$
July 19, 2022
October 19, 2022
March 11,
2022
June 10, 2022
September 16,
2022
December 2,
2022
0.18
0.20
0.20
0.20
$
$
88
98
99
98
383
Payment Date
March 25,
2022
June 24, 2022
September 30,
2022
December 16,
2022
The total amount paid of $383 million was recorded in retained earnings
within Nasdaq's stockholders' equity in the Consolidated Balance Sheets at
December 31, 2022.
F-32
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following tables present our financial assets and financial liabilities that
were measured at fair value on a recurring basis as of December 31, 2022 and
December 31, 2021.
December 31, 2022
Total
Level 1
Level 2
Level 3
(in millions)
$
147 $
147 $
— $
—
7
7
—
—
7
7
20
181 $
—
147 $
20
34 $
December 31, 2021
—
—
—
—
Total
Level 1
Level 2
Level 3
(in millions)
In January 2023, the board of directors approved a regular quarterly cash
dividend of $0.20 per share on our outstanding common stock. The dividend is
payable on March 31, 2023 to shareholders of record at the close of business
on March 17, 2023. The estimated aggregate payment of this dividend is $98
million. Future declarations of quarterly dividends and the establishment of
future record and payment dates are subject to approval by the board of
directors.
The board of directors maintains a dividend policy with the intention to
provide stockholders with regular and increasing dividends as earnings and
cash flows increase.
13. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
European government
debt securities
Year Ended December 31,
2022
2021
2020
(in millions, except share and per share amounts)
Corporate debt
securities
Numerator:
Net income
attributable to
common shareholders $
Denominator:
Weighted-average
common shares
outstanding for basic
earnings per share
1,125 $
1,187 $
933
492,420,787
497,698,377
493,245,573
State-owned enterprises
and municipal
securities
Swedish mortgage
bonds
Weighted-average effect of dilutive securities:
Employee equity
awards
Contingent issuance
of common stock
Weighted-average
common shares
outstanding for
diluted earnings per
share
5,436,778
7,389,189
6,406,596
Total assets at fair value $
—
—
1,059,654
497,857,565
505,087,566
500,711,823
Basic and diluted earnings per share:
Basic earnings per
share
$
2.28 $
Diluted earnings per
share
$
2.26 $
2.38 $
2.35 $
1.89
1.86
European government
debt securities
Corporate debt
securities
In the table above, employee equity awards from our PSU program, which are
considered contingently issuable, are included in the computation of dilutive
earnings per share on a weighted average basis when management determines
that the applicable performance criteria would have been met if the
performance period ended as of the date of the relevant computation.
Securities that were not included in the computation of diluted earnings per
share because their effect was antidilutive were immaterial for the years ended
December 31, 2021 and 2020.
$
144 $
144 $
— $
—
20
—
20
—
State-owned enterprises
and municipal
securities
Swedish mortgage
bonds
Time deposits
Total assets at fair value $
11
—
11
21
12
208 $
—
—
144 $
21
12
64 $
—
—
—
—
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 and cash equivalents,
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 investment in OCC is accounted for under the equity method of
accounting. We have elected the measurement alternative for the majority of
our equity securities, which primarily represent various strategic investments
through our corporate venture program. See “Equity Method
made
Investments,” and “Equity Securities,” of Note 6, “Investments,” for further
discussion.
F-33
We also consider our debt obligations to be financial instruments. As of
December 31, 2022, the majority of our debt obligations were fixed-rate
obligations. We are exposed to changes in interest rates as a result of
borrowings under our 2022 Credit Facility, as the interest rates on this facility
have a variable rate depending on the maturity of the borrowing and the
implied underlying reference rate. As of December 31, 2022, we had no
outstanding borrowings under our 2022 Credit Facility. We are also exposed to
changes in interest rates as a result of the amounts outstanding from the sale of
commercial paper under our commercial paper program. As of December 31,
2022, we had $664 million outstanding under our commercial paper program.
The fair value of our remaining debt obligations utilizing discounted cash flow
analyses for our floating rate debt, and prevailing market rates for our fixed
rate debt was $4.4 billion as of December 31, 2022 and $5.9 billion as of
December 31, 2021. 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 as of December 31, 2022
approximated the carrying value since the rates of interest on this short-term
debt approximated market rates. 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, 2022 and December 31, 2021, 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, 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 three member sponsored default funds: one related
to financial markets, one related to commodities markets and one related to
the seafood market. 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. See “Default
Fund Contributions” below for further discussion of Nasdaq Clearing’s default
fund. A power of assessment and a liability waterfall have also been
implemented to further align risk between Nasdaq Clearing and its clearing
members. See “Power of Assessment” and “Liability Waterfall” below for
further discussion.
Nasdaq Commodities Clearing Default
In September 2018, a member of the Nasdaq Clearing commodities market
defaulted due to the 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.
F-34
In December 2018, the SFSA initiated a review of Nasdaq Clearing. In
January 2021, the SFSA issued a warning combined with an administrative
fine of approximately $29 million (SEK 300 million) to Nasdaq Clearing
based on its review. Nasdaq Clearing appealed the SFSA´s decision to the
Administrative Court. In December 2021, the court rejected Nasdaq Clearing’s
appeal and upheld the decision of the SFSA. In January 2022, Nasdaq
Clearing appealed this decision to the Administrative Court of Appeal. The
most recent hearing took place in October 2022, and we received the decision
in November 2022. The court decided to reduce the administrative fine issued
by the SFSA from 300 million SEK to 250 million SEK (approximately $24
million). In December 2022, Nasdaq Clearing appealed the decision of the
Administrative Court of Appeal to the Supreme Administrative Court of
Appeal. While we continue to firmly believe in the merit of our appeal, due to
the decision by the Administrative Court, we have determined it is appropriate
to record an accrual for the full amount of the administrative fine issued by the
SFSA. A charge for $29 million was recorded to regulatory expense in our
Consolidated Statements of Income for the year ended December 31, 2021. As
a result of the reduced fine communication in 2022, we have released $5
million to regulatory expense for the year ended December 31, 2022.
Default Fund Contributions and Margin Deposits
As of December 31, 2022, clearing member default fund contributions and
margin deposits were as follows:
Cash Contributions
December 31, 2022
Non-Cash
Contributions
(in millions)
Total Contributions
$
$
1,345
5,676
7,021
$
$
115
7,683
7,798
$
$
1,460
13,359
14,819
Default fund
contributions
Margin deposits
Total
Of the total default fund contributions of $1,460 million, Nasdaq Clearing can
utilize $1,377 million as capital resources in the event of a counterparty
default. The remaining balance of $83 million pertains to member posted
surplus balances.
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.
Clearing member cash contributions are maintained in demand deposits held
at central banks and large, highly rated financial institutions or secured
through direct investments, primarily central bank certificates and highly rated
European government debt securities with original maturities primarily one
year or less, reverse repurchase agreements and multilateral development bank
debt securities. Investments in
reverse repurchase agreements range in maturity from 2 to 10 days and are
secured with highly rated government securities and multilateral development
banks. The carrying value of these securities approximates their fair value due
to the short-term nature of the instruments and reverse repurchase agreements.
Nasdaq Clearing has invested the total cash contributions of $7,021 million as
of December 31, 2022 and $5,911 million as of December 31, 2021, in
accordance with its investment policy as follows:
December 31, 2022
December 31, 2021
$
Demand deposits
Central bank certificates
Restricted cash and cash equivalents $
European government debt securities
Reverse repurchase agreements
Multilateral development bank debt
securities
Investments
$
$
Total
(in millions)
4,775 $
1,695
6,470 $
222
192
137
551 $
7,021 $
3,061
2,013
5,074
414
152
271
837
5,911
In the table above, the change from December 31, 2021 to December 31, 2022
includes currency translation adjustments of $1,255 million for restricted cash
and cash equivalents and $75 million for investments.
For the years ended December 31, 2022, 2021 and 2020 investments related to
default funds and margin deposits, net includes purchases of investment
securities of $47,525 million, $41,098 million and $54,046 million,
respectively, and proceeds from sales and redemptions of investment securities
of $47,736 million, $40,966 million and $54,155 million, respectively.
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 limiting 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.
Default Fund Contributions
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 be made to all markets’ default funds in which the
F-35
member is active. Clearing members’ eligible contributions may include cash
and non-cash contributions. Cash contributions received are maintained in
demand deposits held at central banks and large, highly rated financial
institutions or invested by Nasdaq Clearing, in accordance with its investment
policy, either in central bank certificates, highly rated government debt
securities, reverse repurchase agreements with highly rated government debt
securities as collateral, or multilateral development bank debt securities.
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, 2022, Nasdaq Clearing committed capital totaling
$125 million to the liability waterfall and overall regulatory capital, in the
form of government debt securities, which are recorded as financial
investments in the Consolidated Balance Sheets. The combined regulatory
capital of the clearing members and Nasdaq Clearing is intended 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 and default fund
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, 2022.
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 230.0% of the
clearing member’s aggregate contribution to the financial, commodities and
seafood markets’ default funds.
F-36
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 and default fund contribution 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 deposits and pledged assets, is
depleted, then capital is utilized in the following amount and order:
• junior capital contributed by Nasdaq Clearing, which totaled $40 million as
of December 31, 2022;
• 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; and
• fully segregated senior capital for each specific market contributed by
Nasdaq Clearing, calculated in accordance with clearinghouse rules, which
totaled $21 million as of December 31, 2022.
If additional funds are needed after utilization of the liability waterfall, or if
part of the waterfall has been utilized and needs to be replenished, 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.
During 2022, Nasdaq Clearing updated its recovery plan and rule book by
introducing additional recovery tools, in line with the new European Union
regulations for the recovery and resolution of central counterparties, which
became effective during 2022.
In addition to the capital held to withstand counterparty defaults described
above, Nasdaq Clearing also has committed capital of $64 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 presents the market value of derivative contracts
outstanding prior to netting:
Commodity and seafood options, futures and
forwards
Fixed-income options and futures
Stock options and futures
Index options and futures
Total
In the table above:
December 31, 2022
(in millions)
$
$
654
2,282
141
43
3,120
• 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.
• We determined the fair value of our futures contracts based upon quoted
market prices and average quoted market yields.
• We determined the fair value of our forward contracts using standard
valuation models that were based on market-based observable inputs
including benchmark rates and the spot price of the underlying instrument.
Derivative Contracts Cleared
The following table presents the total number of derivative contracts cleared
through Nasdaq Clearing for the years ended December 31, 2022 and 2021:
Commodity and seafood options, futures
and forwards
Fixed-income options and futures
Stock options and futures
Index options and futures
Total
Year Ended December 31,
2022
2021
288,142
21,992,124
18,619,950
45,616,647
86,516,863
536,252
23,140,918
20,308,811
37,860,187
81,846,168
In the table above, the total volume in cleared power related to commodity
contracts was 413 Terawatt hours (TWh) and 813 TWh for the years ended
December 31, 2022 and 2021, respectively.
Resale and Repurchase Agreements Contracts Outstanding and Cleared
The outstanding contract value of resale and repurchase agreements was $120
million and $139 million as of December 31, 2022 and 2021, respectively. The
total number of resale and repurchase agreements contracts cleared was
6,287,717 and 6,070,414 for the years ended December 31, 2022 and 2021,
respectively.
F-37
Leases
Assets:
Operating lease
assets
Liabilities:
Current lease
liabilities
Non-current lease
liabilities
Total lease
liabilities
16. LEASES
We have operating leases which are primarily real estate leases predominantly
for our U.S. and European headquarters, data centers and for general office
space. The following table provides supplemental balance sheet information
related to Nasdaq's operating leases:
Total lease payments in the table above exclude $51 million of legally binding
minimum lease payments for leases signed but not yet commenced.
The following table provides information related to Nasdaq's lease term and
discount rate:
Balance Sheet
Classification
December 31, 2022
December 31, 2021
Weighted-average remaining lease term (in years)
(in millions)
Weighted-average discount rate
December 31, 2022
10.5
3.6 %
Operating lease
assets
Other current
liabilities
Operating lease
liabilities
$
$
$
444 $
366
The following table provides supplemental cash flow information related to
Nasdaq's operating leases:
54 $
452
506 $
37
386
423
Cash paid for amounts included in
the measurement of operating lease
liabilities
Lease assets obtained in exchange
for operating lease liabilities
$
$
Year Ended December 31,
2022
2021
(in millions)
2020
66 $
77 $
77
137 $
45 $
100
The following table summarizes Nasdaq's lease cost:
Year Ended December 31,
17. INCOME TAXES
2022
2021
2020
Income Before Income Tax Provision
Operating lease cost
Variable lease cost
Sublease income
Total lease cost
(in millions)
$
$
75 $
32
(3)
104 $
85 $
28
(4)
109 $
85
26
(4)
107
In the table above, operating lease costs include short-term lease cost, which
was immaterial.
The following table reconciles the undiscounted cash flows for each of the
first five years and total of the remaining years to the operating lease liabilities
recorded in our Consolidated Balance Sheets.
December 31, 2022
(in millions)
2023
2024
2025
2026
2027
2028+
Total lease payments
Less: interest
Present value of lease liabilities
$
$
71
70
60
51
48
314
614
(108)
506
In the table above, interest is calculated using the interest rate for each lease.
Present value of lease liabilities include the current portion of $54 million.
The following table presents the domestic and foreign components of income
provision:
before
income
tax
Domestic
Foreign
Income before income tax
provision
$
$
Year Ended December 31,
2022
2021
(in millions)
2020
1,216 $
259
1,299 $
235
898
314
1,475 $
1,534 $
1,212
Income Tax Provision
The
income
tax provision
consists of
following
the
Year Ended December 31,
amounts:
Current income taxes provision:
Federal
State
Foreign
Total current income taxes provision
Deferred income taxes provision
(benefit):
Federal
State
Foreign
Total deferred income taxes provision
Total income tax provision
$
$
2022
2021
2020
(in millions)
170 $
67
77
314
36
6
(4)
38
352 $
144 $
45
64
253
82
22
(10)
94
347 $
114
50
74
238
37
6
(2)
41
279
F-38
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, 2022, the cumulative amount of undistributed earnings in these
subsidiaries is $273 million. Given our intent and ability 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
follows:
December
2022,
2021
and
31,
is
as
2020
Year Ended December 31,
Federal income tax provision at the
statutory rate
State income tax provision, net of
federal effect
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
2022
2021
2020
21.0 %
21.0 %
21.0 %
3.8 %
3.9 %
4.2 %
(0.9)%
0.5 %
(0.3)%
1.1 %
(1.3)%
23.9 %
(1.3)%
0.3 %
(0.3)%
0.6 %
(1.6)%
22.6 %
(0.6)%
0.5 %
(0.2)%
(0.6)%
(1.3)%
23.0 %
The increase in our effective tax rate in 2022 compared to 2021 was primarily
due to an increase in state unrecognized tax benefits. The decrease in our
effective tax rate in 2021 compared to 2020 was primarily due to a tax benefit
related to federal, state and local provision to return adjustments, which is
included in other, net in the table above and excess tax benefits related to
employee share-based compensation.
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.
President Biden signed into law the Inflation Reduction Act of 2022 on
August 16, 2022. Nasdaq does not expect any material impact to the financial
statements or our effective tax rate in future periods.
Deferred Income Taxes
The temporary differences, which give rise to our deferred tax assets and
following:
(liabilities),
consisted
the
of
Deferred tax assets:
Deferred revenues
U.S. federal net operating loss
Foreign net operating loss
State net operating loss
Compensation and benefits
Tax credits
Federal benefit of uncertain tax positions
Operating lease liabilities
Unrealized losses
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 and
goodwill
Investments
Unrealized gains
Operating lease assets
Other
Gross deferred tax liabilities
Net deferred tax liabilities
Reported as:
Non-current deferred tax assets
Deferred tax liabilities, net
Net deferred tax liabilities
December 31,
2022
2021
(in millions)
18 $
5
12
3
42
3
9
118
—
33
243
(4)
239 $
12
—
4
1
32
—
6
99
2
30
186
(4)
182
(65) $
(65)
(375)
(105)
(29)
(103)
(15)
(692) $
(453) $
3 $
(456)
(453) $
(322)
(99)
—
(84)
(16)
(586)
(404)
2
(406)
(404)
$
$
$
$
$
$
$
In the table above, non-current deferred tax assets are included in other non-
current assets in the Consolidated Balance Sheets.
We recognized a valuation allowance of $4 million as of December 31, 2022
and 2021 due to recurring operating losses in a foreign jurisdiction. Based on
all available positive and negative evidence, we believe the sources of future
taxable income are sufficient to realize the remainder of Nasdaq's deferred tax
asset inventory.
F-39
Nasdaq has deferred tax assets associated with NOLs in U.S. state and local
and non-U.S. jurisdictions with the following expiration dates:
Jurisdiction
December 31, 2021
Expiration Date
Foreign NOL
Federal NOL
State NOL
Unrecognized Tax Benefits
(in millions)
$
12 No expiration
5 No expiration
3 2025-2040
A reconciliation of the beginning and ending amount of unrecognized tax
benefits is as follows:
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 with taxing
authorities
Reductions as a result of lapses of the
applicable statute of limitations
Ending balance
Year Ended December 31,
2022
2021
2020
(in millions)
$
57 $
42 $
48
13
9
(7)
16
11
(6)
(2)
70 $
(6)
57 $
$
9
2
(6)
(11)
42
We had $70 million of unrecognized tax benefits as of December 31, 2022,
$57 million as of December 31, 2021, and $42 million as of December 31,
2020 which, if recognized in the future, would affect our effective tax rate.
Nasdaq does not believe that our unrecognized tax benefits will materially
change over the next 12 months.
We recognize interest and/or penalties related to income tax matters in the
provision for income taxes in our Consolidated Statements of Income, which
was less than $1 million tax expense for the year ended December 31, 2022,
and a tax benefit of $2 million for both years ended December 31, 2021 and
2020. Accrued interest and penalties, net of tax effect were $5 million as of
December 31, 2022 and $4 million as of December 31, 2021.
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. We are subject to examination by federal, state and local, and
foreign tax authorities. Our Federal income tax return for the years 2019
through 2021 is subject to examination by the Internal Revenue Service.
Several state tax returns are currently under examination by the respective tax
authorities for the years 2012 through 2021. Non-U.S. tax returns are subject
to examination by the respective tax authorities for the years 2017 through
2022. 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. Examination outcomes and
the timing of examination settlements are subject to uncertainty. 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. We do not expect to
settle any material tax audits in the next twelve months.
18. 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 $4 million as of
December 31, 2022 and $5 million December 31, 2021. As discussed in
“Other Credit Facilities,” of Note 9, “Debt Obligations,” we also have credit
facilities primarily related to our Nasdaq Clearing operations, which are
available in multiple currencies, and totaled $184 million as of December 31,
2022 and $212 million as of December 31, 2021 in available liquidity, none of
which was utilized.
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,” for further discussion of
Nasdaq Clearing performance guarantees.
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.
F-40
Routing Brokerage Activities
CFTC Matter
to guarantee
require members
One of our broker-dealer subsidiaries, Nasdaq Execution Services, provides a
guarantee to securities clearinghouses and exchanges under its standard
membership agreements, which
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
make payments under these arrangements is unlikely. Accordingly, no
contingent liability is recorded in the Consolidated Balance Sheets for these
arrangements.
Legal and Regulatory Matters
Armenian Stock Exchange Investigation
As disclosed in our prior filings with the SEC, a former non-U.S. subsidiary of
Nasdaq, NASDAQ OMX Armenia OJSC, operated the Armenian Stock
Exchange and the Central Depository of Armenia, which are regulated by the
Central Bank of Armenia under Armenian law. In accordance with the
requirements of Armenian law, Mellat Bank SB CJSC, an Armenian entity
that is designated under Executive Order 13382, was a market participant on
the Armenian Stock Exchange and, as a result, paid participation and
transaction fees to the Armenian Stock Exchange during the period from
2012-2014. In 2014, we voluntarily self-disclosed this matter to the U.S.
Department of Treasury’s Office of Foreign Assets Control, or OFAC, and
received authorization from OFAC to continue, if necessary, certain activities
pertaining to Mellat Bank SB CJSC in Armenia in a limited manner. In 2015,
Nasdaq sold a majority of its ownership of Nasdaq OMX Armenia OJSC, with
the remaining minority interest sold in 2018.
OFAC has been conducting an inquiry into the Armenian Stock Exchange
matter described above and in our prior filings since 2016, and during the first
quarter of 2021, we were advised that OFAC is considering a civil monetary
penalty in connection with that matter. We are currently in discussions with
OFAC.
We believe our decision to voluntarily self-report this issue and our continued
cooperation with OFAC, along with the permit we received from OFAC in
connection with our transactions involving the Armenian Stock Exchange,
will be mitigating factors with respect to the matter, and that any monetary
fines or restrictions will not be material to our financial results. We cannot
currently predict when our discussions with OFAC will conclude or the exact
amount of any potential penalties imposed, but have accrued for an immaterial
loss contingency.
In June 2022, NASDAQ Futures, Inc. (“NFX”), a non-operational, wholly-
owned subsidiary of Nasdaq, received a telephonic “Wells Notice” from the
staff of the CFTC relating to certain alleged potential violations by NFX of
provisions of the Commodity Exchange Act and CFTC rules thereunder
during the period beginning July 2015 through October 2018. The Wells
Notice informed NFX that the CFTC staff has made, subject to consideration
of NFX’s response, a preliminary determination to recommend that the CFTC
authorize an enforcement action against NFX in connection with its former
futures exchange business. Nasdaq sold NFX’s futures exchange business to a
third-party in November 2019, including the portfolio of open interest in NFX
contracts. During 2020, all remaining open interest in NFX contracts was
migrated to other exchanges and NFX ceased operation. A Wells Notice is
neither a formal charge of wrongdoing nor a final determination that the
recipient has violated any law. NFX has submitted a response to the Wells
Notice that contests all aspects of the Staff’s position, and is engaged in
discussions with the CFTC staff concerning a potential resolution to the
investigation, which could include a settlement of the matter. While Nasdaq
believes NFX has a meritorious defense to any claims alleged by the CFTC
staff, we are unable to predict the outcome of this matter and it could have a
negative effect on our operating results or reputation, which could be material.
Accordingly, we are unable to reasonably estimate any potential loss or range
of loss, and therefore, we have not accrued for a loss contingency.
Nasdaq Commodities Clearing Default
In 2022, as a result of a decision received in the fourth quarter, we recorded an
adjustment to reduce a previous accrual recorded in 2021 related to an
administrative fine issued by the SFSA associated with the default which
occurred in 2018. The charge and subsequent adjustment were included in
regulatory expense in our Consolidated Statements of Income for the years
ended December 31, 2022 and 2021. See “Nasdaq Commodities Clearing
Default,” of Note 15, “Clearing Operations,” for further information.
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.
F-41
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, there are
matters that may lead to 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.
19. BUSINESS SEGMENTS
In 2022, we announced a new organizational structure which aligns our
businesses more closely with the foundational shifts that are driving the
evolution of the global financial system. In order to amplify our strategy, we
aligned the Company more closely with evolving client needs. During the
fourth quarter of 2022, we began to manage, operate and provide our products
and services in line with this new divisional structure. As a result, our four
previous business segments, Market Technology, Investment Intelligence,
Corporate Platforms and Market Services have been changed to align with our
new corporate structure that includes three business segments: Market
Platforms, Capital Access Platforms and Anti-Financial Crime. See Note 1,
“Organization and Nature of Operations,” for further discussion of our
reportable segments.
This Annual Report on Form 10-K presents our results in alignment with the
new corporate structure. All periods presented are restated to reflect the new
structure.
Our management allocates resources, assesses performance and manages these
businesses as three 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. Our chief operating decision
maker does not review total assets or statements of income below operating
income by segments as key performance metrics; therefore, such information
is not presented below.
The following table presents certain information regarding our business
segments for the years ended December 31, 2022, 2021 and 2020:
Year Ended December 31,
2022
2021
2020
$
Market Platforms
Total revenues
Transaction-based expenses
Revenues less transaction-based
expenses
Depreciation and amortization*
Operating income
Purchase of property and equipment
Capital Access Platforms
Total revenues
Depreciation and amortization*
Operating income
Purchase of property and equipment
Anti-Financial Crime
Total revenues
Depreciation and amortization*
Operating income
Purchase of property and equipment
Corporate Items
Total revenues
Depreciation and amortization
Operating loss
Consolidated
Total revenues
Transaction-based expenses
Revenues less transaction-based
expenses
$
Depreciation and amortization
Operating income
$
Purchase of property and equipment $
$
$
(in millions)
4,225 $
(2,644)
4,048 $
(2,466)
1,581
1,582
59
859
83
1,684
36
916
50
306
10
80
19
11
153
(291)
64
893
96
1,568
34
844
50
231
8
44
17
39
172
(340)
6,226 $
(2,644)
5,886 $
(2,466)
3,582 $
3,420 $
258 $
1,564 $
152 $
278 $
1,441 $
163 $
4,179
(2,722)
1,457
55
784
125
1,287
30
651
54
116
6
35
9
43
111
(236)
5,625
(2,722)
2,903
202
1,234
188
*excludes amortization of acquired intangible assets.
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, which are presented
in the table below, include the following:
F-42
• 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 segments, and the relative operating performance of the segments
intangible asset
between periods. Management does not consider
amortization expense for the purpose of evaluating the performance of our
segments or their managers or when making decisions to allocate resources.
Therefore, we believe performance measures excluding intangible asset
amortization expense provide management with a useful representation of
our segments' ongoing activity in each period.
• Revenues and expenses - divested/contributed businesses: For 2022 and
2021, we have included in corporate items the revenues and expenses of our
U.S. Fixed Income business, which was previously included in our Market
Platforms and Capital Access Platforms results. See “2021 Divestiture,” of
Note 4, “Acquisitions and Divestiture,” for further discussion of this
divestiture. Also included are the revenues and expenses of our Nordic
broker services business for which we completed the wind-down in June
2022. For 2021 and 2020, we included in corporate items the revenues and
expenses associated with the NPM business which we contributed to a
standalone, independent company, of which we own the largest minority
interest, together with a consortium of third-party financial institutions in
July 2021. Prior to July, these revenues were previously included in our
Capital Access Platforms results.
• Merger and strategic initiatives expense: We have pursued various strategic
initiatives and completed acquisitions and divestitures in recent years that
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. Management does not consider merger and
strategic initiatives expense for the purpose of evaluating the performance
of our segments or their managers or when making decisions to allocate
resources. Therefore, we believe performance measures excluding merger
and strategic initiatives expense provide management with a useful
representation of our segments' ongoing activity in each period.
• Restructuring charges: In October 2022, following our September
announcement to realign our segments and leadership, we initiated a
divisional alignment program with a focus on realizing the full potential of
this structure. In 2019, we initiated the transition of certain technology
platforms to advance our strategic opportunities as a technology and
analytics provider and continue the realignment of certain business areas.
See Note 20, “Restructuring Charges,” for further discussion of these plans.
We believe performance measures excluding restructuring charges provide
management with a useful representation of our segments' ongoing activity
in each period.
• Other 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. Other items
include:
◦ for the year ended December 31, 2022, accruals related to a legal matter,
included in general, administrative and other expense in our Consolidated
Statements of Income and a regulatory matter offset by the release of $5
million in relation to the reduction of the administrative fine issued by the
SFSA included in regulatory expense in our Consolidated Statements of
Income;
◦
for the year ended December 31, 2021 a charge related to an
administrative fine imposed by the SFSA. The 2022 and 2021 SFSA fine
is associated with the default that occurred in 2018, see “Nasdaq
Commodities Clearing Default,” of Note 15, “Clearing Operations,” for
further discussion; and for the year ended December 31, 2020 the reversal
of a regulatory fine issued by the SFSA. All charges and releases have
been included in regulatory expense in the Consolidated Statements of
Income;
◦ for the year ended December 31, 2020, a provision for notes receivable
the
technology development for
the funding of
associated with
consolidated audit trail;
◦ for the years ended December 31, 2022, 2021 and 2020, a charge on
extinguishment of debt;
◦ for the year ended December 31, 2020, charitable donations made to the
Nasdaq Foundation, COVID-19 response and relief efforts, and social
justice charities; and
◦ for the years ended December 31, 2022 and 2020, certain litigation costs
which are recorded in professional and contract services expense in the
Consolidated Statements of Income.
The above charges are recorded in general, administrative and other expense,
unless otherwise noted, in our Consolidated Statements of Income.
F-43
20. RESTRUCTURING CHARGES
In October 2022, following our September announcement to realign our
segments and leadership, we initiated a divisional alignment program with a
focus on realizing the full potential of this structure. In connection with the
program, we expect to incur $115 million to $145 million in pre-tax charges
principally related to employee-related costs, consulting, asset impairments
and contract terminations over a two-year period. We expect to achieve
benefits, in the form of combined annual run rate operating efficiencies and
revenue synergies of approximately $30 million annually by 2025. Costs
related to the divisional alignment program will be recorded as restructuring
charges in the Consolidated Statements of Income.
In September 2019, we initiated the transition of certain technology platforms
to advance the Company's strategic opportunities as a technology and
analytics provider and continue the realignment of certain business areas. In
connection with these restructuring efforts, we retired certain elements of our
market infrastructure and technology product offerings as we implement NFF
internally and externally. This represented a
and other
fundamental shift in our strategy and technology as well as executive
realignment. In June 2021, we completed our 2019 restructuring plan and
recognized total pre-tax charges of $118 million over a two-year period. Total
pre-tax charges related primarily to non-cash items such as asset impairments
and accelerated depreciation, and third-party consulting costs. Severance and
employee-related charges were also incurred.
technologies
The following table presents a summary of the 2022 and 2019 restructuring
plan charges in the Consolidated Statements of Income for the years ended
December 31, 2022, 2021 and 2020.
Asset impairment charges
Consulting services
Contract terminations
Employee-related costs
Other
Total restructuring charges
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
8 $
3
—
3
1
15 $
4 $
19
—
1
7
31 $
14
22
3
3
6
48
The following table summarizes our Corporate Items:
Revenues - divested/contributed
businesses
Expenses:
Amortization expense of acquired
intangible assets
Merger and strategic initiatives
expense
Restructuring charges
Regulatory matters
Provision for notes receivable
Extinguishment of debt
Charitable donations
Expenses - divested/contributed
businesses
Other
Total expenses
Operating loss
Year Ended December 31,
2022
2021
2020
(in millions)
$
11 $
39 $
43
153
170
103
82
15
1
—
16
—
87
31
33
—
33
—
33
48
(6)
6
36
17
5
30
302
(291) $
16
9
379
(340) $
24
18
279
(236)
$
For further discussion of our segments’ results, see “Segment Operating
Results,” of “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
Geographic Data
The following table presents total revenues and property and equipment, net
by geographic area for 2022, 2021 and 2020. Revenues are classified based
upon the location of the customer. Property and equipment information is
based on the physical location of the assets.
Total
Revenues
Property and
Equipment, Net
2022:
United States
All other countries
Total
2021:
United States
All other countries
Total
2020:
United States
All other countries
Total
$
$
$
$
$
$
(in millions)
5,100 $
1,126
6,226 $
4,822 $
1,064
5,886 $
4,662 $
963
5,625 $
344
188
532
325
184
509
311
164
475
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 2022, 2021 and 2020.
F-44
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Exhibit 4.18
Nasdaq, Inc. (the “Company”) has four classes of securities registered under Section 12 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”):
(1) Common Stock, par value $0.01 per share (“Common Stock”);
(2) 0.900% Senior Notes due 2033;
(3) 0.875% Senior Notes due 2030; and
(4) 1.75% Senior Notes due 2029.
As used in this summary, the terms “Nasdaq,” “the Company,” “we,” “our,” and “us” refer solely to Nasdaq, Inc. and not its
subsidiaries, unless otherwise specified.
Description of Common Stock
The following is a description of the material terms and provisions relating to our common stock. Because it is a summary, the
following description is not complete and is subject to and qualified in its entirety by reference to our Amended and Restated
Certificate of Incorporation, as amended, or Certificate, and by-laws, and provisions of Delaware law which define the rights of our
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.
Subject to certain additional conditions, this limitation does not apply to persons exempted from this limitation by our Board of
Directors prior to the time such person owns more than 5.0% of the then-outstanding shares of our common stock.
At any meeting of our stockholders, a majority of the votes entitled to be cast will constitute a quorum for such meeting.
Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our board
of directors out of funds legally available for them. In
the event of our liquidation, dissolution, or winding-up, the holders of our common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. Our common stock
has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to
our common stock. All outstanding shares of common stock are fully paid and non-assessable. Future dividends, if any, will be
determined by our board of directors.
Certain Provisions of our Certificate and By-Laws
Some provisions of our Certificate and by-laws, which provisions are summarized below, may be deemed to have an anti-takeover
effect and may delay, defer, or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including
those attempts that might result in a premium over the market price for the shares held by stockholders.
Advance Notice Requirements for Stockholder Proposals and Directors Nominations
Our by-laws provide that stockholders seeking to bring business before an annual meeting of stockholders, or to nominate
candidates for election as directors at an annual meeting of stockholders, must provide timely notice in writing. To be timely, a
stockholder’s notice must be delivered to or mailed and received at our principal executive offices not less than 90 nor more than 120
days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, that in the event that the
annual meeting is called for a date that is not within 30 days before or 70 days after such anniversary date, notice by the shareholder in
order to be timely must be received not earlier than 120 days prior to the meeting and not later than the later of 90 days prior to the
meeting and the close of business on the 10th day following the date on which notice of the date of the annual meeting was first
publicly announced by Nasdaq. In the case of a special meeting of stockholders called for the purpose of electing directors, notice by
the stockholder in order to be timely must be received not earlier than 120 days prior to the meeting and not later than the later of 90
days prior to the meeting or the close of business on the 10th day following the day on which public disclosure of the date of the special
meeting and our nominees was first made. In addition, our by-laws specify certain requirements as to the form and content of a
stockholder’s notice. These provisions may preclude stockholders from bringing matters before an annual meeting of stockholders or
from making nominations for directors at an annual or special meeting of stockholders.
Proxy Access
Our by-laws include a proxy access provision that permits a stockholder, or a group of stockholders, owning at least three percent
of our outstanding shares of common stock
continuously for at least three years to nominate and include in the proxy materials for an annual meeting of stockholders director
nominees constituting up to the greater of two individuals and 25% of the total number of directors then in office, provided that the
stockholder(s) and nominee(s) satisfy the requirements specified in the by-laws.
Stockholder Action
Our Certificate provides that stockholders are not entitled to act by written consent in lieu of a meeting.
Right to Call Special Meeting
Our by-laws provide that stockholders representing 15% or more of our outstanding shares can convene a special meeting of
shareholders.
Amendments; Vote Requirements
The General Corporation Law of the State of Delaware provides generally that the affirmative vote of a majority of the shares
entitled to vote on any matter is required to amend a corporation’s certificate of incorporation, unless a corporation’s certificate of
incorporation requires a greater percentage. Our Certificate imposes majority voting requirements in connection with stockholder
amendments to the by-laws and in connection with the amendment of certain provisions of the Certificate, including those provisions of
the Certificate relating to the limitations on voting rights of certain persons, removal of directors and prohibitions on stockholder action
by written consent.
Authorized But Unissued Shares
The authorized but unissued shares of our common stock will be available for future issuance without stockholder approval in
most cases. These additional shares may be utilized for a variety of corporate purposes, including future public or private offerings to
raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of our
common stock could render more difficult, or discourage, an attempt to obtain control of us by means of a proxy contest, tender offer,
merger or otherwise.
Delaware Business Combination Statute
We are organized under Delaware law. Delaware law generally prohibits a publicly-held or widely-held corporation from engaging
in a “business combination” with an “interested stockholder” for three years after the stockholder becomes an interested stockholder.
An
“interested stockholder” is a person who, together with affiliates and associates, owns (or, in some cases, within three years, did own)
directly or indirectly 15% or more of the corporation’s outstanding voting stock. A “business combination” includes a merger, asset sale
or other transaction that results in a financial benefit to the interested stockholder. However, Delaware law does not prohibit these
business combinations if:
1. before the stockholder becomes an interested stockholder, the corporation’s board approved either the business combination or
the transaction that resulted in the stockholder becoming an interested stockholder;
2. after the transaction that results in the stockholder becoming an interested stockholder, the interested stockholder owns at least
85% of the corporation’s outstanding voting stock (excluding certain shares); or
3.
the corporation’s board approves the business combination and the holders of at least two-thirds of the corporation’s outstanding
voting stock that the interested stockholder does not own authorize the business combination at a meeting of stockholders.
Stockholders’ Agreement
On December 14, 2022, we entered into an amendment to our stockholders’ agreement with Investor AB (the “Amended
Stockholders’ Agreement”), amending the original stockholders’ agreement that was entered into between Nasdaq and Investor AB on
December 16, 2010.
The Amended Stockholders’ Agreement reinstated Investor AB’s right to propose for nomination one person, reasonably
acceptable to our Nominating & ESG Committee, for election to our Board of Directors so long as Investor AB continues to
beneficially own at least 10% of the outstanding common stock of Nasdaq. We are obligated by the terms of the Amended
Stockholders’ Agreement to (i) include the Investor AB designee as a nominee to the Board of Directors on each slate of nominees for
election to the Board of Directors proposed by management of Nasdaq, (ii) recommend the election of the Investor AB designee to our
shareholders and (iii) otherwise use our reasonable best efforts (which shall include the solicitation of proxies) to cause the Investor AB
designee to be elected to the Board of Directors.
The foregoing summary of the Amended Stockholders’ Agreement does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the Amended Stockholders’ Agreement, which was filed as Exhibit 4.1 to Nasdaq’s Current
Report on Form 8-K filed on December 16, 2022.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare. Its address is 480 Washington Boulevard, Jersey City,
New Jersey 07310 and its telephone number is (800) 736-3001.
Listing
Our common stock is listed on The Nasdaq Stock Market under the trading symbol “NDAQ.”
Description of the 0.900% Senior Notes Due 2033
The 0.900% Senior Notes due 2033 (the “2033 Notes”) were issued under an indenture, dated as of June 7, 2013 (the “base
indenture”) between Nasdaq, Inc. and Wells Fargo Bank, National Association, as trustee (the “Trustee”) and a twelfth supplemental
indenture dated as of July 30, 2021 (the “supplemental indenture” and, together with the base indenture, the “indenture”) by and among
Nasdaq, the Trustee and HSBC Bank USA, National Association, as registrar and transfer agent. The indenture is publicly available at
www.sec.gov.
We issued €615 million aggregate principal amount of the 2033 Notes on July 30, 2021.
This summary is subject to, and qualified in its entirety by reference to, all the provisions of the 2033 Notes and the indenture,
including definitions of certain terms used therein.
General
The 2033 Notes:
•
•
•
•
are senior unsecured obligations of ours;
rank equally in right of payment with all of our other senior unsecured indebtedness from time to time outstanding,
commercial paper issuances and indebtedness under our credit facility;
are structurally subordinated in right of payment to all existing and future obligations of our subsidiaries, including
claims with respect to trade payables; and
are effectively subordinated in right of payment to all of our existing and future secured indebtedness and other secured
obligations to the extent of the value of the collateral securing any such indebtedness and other obligations.
The 2033 Notes were issued in minimum denominations of €100,000 and integral multiples of €1,000 in excess thereof.
Principal, Maturity and Interest
The 2033 Notes will bear interest at a rate of 0.900% per year. Interest on the Notes is payable annually in arrears on July 30 of
each year, beginning on July 30, 2022, and will be computed on the basis of the actual number of days in the period for which interest is
being
calculated and the actual number of days from and including the last date on which interest was paid on the 2033 Notes (or the
settlement date if no interest has been paid or duly provided for on the 2033 Notes), to but excluding the next date on which interest is
paid or duly provided for. This payment convention is referred to as ACTUAL/ACTUAL (ICMA) as defined in the rulebook of the
International Capital Market Association. Interest on the 2033 Notes will accrue from and including the settlement date and will be paid
to holders of record on the day immediately prior to the applicable interest payment date.
The 2033 Notes will mature on July 30, 2033. On the maturity date of the 2033 Notes, the holders will be entitled to receive
100% of the principal amount of such 2033 Notes. The 2033 Notes will not have the benefit of any sinking fund.
If any interest payment date, redemption date or maturity date falls on a day that is not a business day, then the relevant payment
may be made on the next succeeding business day and no interest will accrue because of such delayed payment. With respect to the
2033 Notes, when we use the term “business day” we mean any day except a Saturday, a Sunday or a day on which banking institutions
in the applicable place of payment are authorized or required by law, regulation or executive order to close.
Claims against the Company for payment of principal, interest and additional amounts, if any, on the 2033 Notes will become
void unless presentment for payment is made (where so required under the indenture) within, in the case of principal and additional
amounts, if any, a period of ten years or, in the case of interest, a period of five years, in each case from the applicable original date of
payment therefor.
Euro Notes—Issuance in Euros
Initial holders of the 2033 Notes paid for the 2033 Notes in euros, and principal, premium, if any, and interest payments and
additional amounts, if any, in respect of the 2033 Notes will be payable in euros. If, on or after the date of this prospectus supplement,
the euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control or the euro is no
longer used by the then member states of the European Monetary Union that have adopted the euro as their currency or for the
settlement of transactions by public institutions within the international banking community, then all payments in respect of the 2033
Notes will be made in U.S. dollars until the euro is again available to us or so used.
The amount payable on any date in euros will be converted to U.S. dollars on the basis of the most recently available market
exchange rate for euros as determined by us in our sole discretion. Any payment in respect of the 2033 Notes so made in U.S. dollars
will not constitute an event of default under the indenture or the 2033 Notes. Neither the trustee nor the paying
agent will be responsible for obtaining exchange rates, effecting conversions or otherwise handling redenominations.
Ranking
The 2033 Notes are general unsecured obligations of ours and will rank equally with all of our existing and future
unsubordinated obligations.
Holders of any secured indebtedness and other secured obligations of the Company will have claims that are prior to your
claims as holders of the 2033 Notes, to the extent of the value of the assets securing such indebtedness and other obligations, in the
event of any bankruptcy, liquidation or similar proceeding.
Further Issues
The 2033 Notes constituted a separate series of debt securities under the indenture, limited to €615 million. Under the indenture,
we may, without the consent of the holders of the 2033 Notes, issue additional 2033 Notes of the same or a different series from time to
time in the future in an unlimited aggregate principal amount; provided that if any such additional 2033 Notes are not fungible with the
2033 Notes offered hereby (or any other tranche of additional 2033 Notes) for U.S. federal income tax purposes, then such additional
2033 Notes will have different ISIN and/or Common Code numbers than the Notes offered hereby (and any such other tranche of
additional 2033 Notes). The 2033 Notes and any additional 2033 Notes of the same series would rank equally and ratably and would be
treated as a single class for all purposes under the indenture. This means that, in circumstances where the indenture provides for the
holders of debt securities of any series to vote or take any action, any of the outstanding 2033 Notes, as well as any additional 2033
Notes that we may issue by reopening such series, will vote or take action as a single class.
Redemption
Optional Redemption
The 2033 Notes will be redeemable, in whole at any time or in part from time to time, at our option, prior to April 30, 2033, at a
redemption price (the “make-whole redemption price”) equal to the greater of (i) 100% of the principal amount of the 2033 Notes and
(ii) as determined by the Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of
principal and interest on the 2033 Notes (exclusive of interest accrued and unpaid as of the date of redemption), discounted to the date
of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)) at the Bund Rate (as defined below), plus 20 basis points, plus
accrued and unpaid interest thereon to the date of redemption. However, if the redemption date is after a record date and on or prior to a
corresponding interest payment date, the interest will be paid on the redemption date to the holder of record on the record date.
Notwithstanding the foregoing, at any time on or after April 30, 2033 (three months before their maturity date), the 2033 Notes
will be redeemable, in whole or in part, at our option and at any time or from time to time, at a redemption price equal to 100% of the
principal amount of the 2033 Notes to be redeemed plus accrued and unpaid interest thereon to, but excluding, the date of redemption.
Notice of any redemption will be mailed at least 10 days, but not more than 60 days, before the redemption date to each
registered holder of 2033 Notes to be redeemed. Once notice of redemption is mailed, the 2033 Notes called for redemption will
become due and payable on the redemption date and at the applicable redemption price, plus accrued and unpaid interest to, but not
including, the redemption date. Unless we default in payment of the redemption price, on and after the redemption date, interest will
cease to accrue on the 2033 Notes (or portion thereof) to be redeemed on such redemption date.
“Bund Rate” means, with respect to any redemption date, the rate per annum equal to the annual equivalent yield to maturity of
the Comparable German Bund Issue, assuming a price for the Comparable German Bund Issue (expressed as a percentage of its
principal amount) equal to the Comparable German Bund Price for such redemption date.
“Comparable German Bund Issue” means that German Bundesanleihe security selected by the Quotation Agent as having a
maturity comparable to the remaining term of the 2033 Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary
financial practice, in pricing new issues of corporate notes of comparable maturity to the remaining term of the Notes.
“Comparable German Bund Price” means, with respect to any redemption date, (i) the average of four Reference German Bund
Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference German Bund Dealer Quotations or
(ii) if the Quotation Agent obtains fewer than four such Reference German Bund Dealer Quotations, the average of all such quotations.
“Quotation Agent” means a Reference German Bund Dealer appointed by us.
“Reference German Bund Dealer” means any dealer of German Bundesanleihe securities selected by us in good faith.
“Reference German Bund Dealer Quotations” means, with respect to each Reference German Bund Dealer and any redemption
date, the average, as determined by us, of the bid and asked prices for the Comparable German Bund Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference German Bund Dealer at 3:30 p.m.,
Frankfurt, Germany time, on the third business day preceding such redemption date.
If we elect to redeem less than all of the 2033 Notes, and such 2033 Notes are at the time represented by a global note, then the
depositary will select by lot the particular interests to be redeemed. If we elect to redeem less than all of the 2033 Notes, and any of
such 2033 Notes are not represented by a global note, then the trustee will select the particular 2033 Notes to be redeemed in a manner
it deems appropriate and fair (and the depositary will select by lot the particular interests in any global note to be redeemed).
We may at any time, and from time to time, purchase the 2033 Notes at any price or prices in the open market or otherwise.
Repurchase upon Change of Control Triggering Event
If a Change of Control Triggering Event (as defined below) occurs with respect to the 2033 Notes, unless we have exercised our
right to redeem the 2033 Notes, we will be required to make an offer to repurchase all or, at the holder’s option, any part (equal to
€100,000 or any integral multiple of €1,000 in excess thereof) of each holder’s 2033 Notes pursuant to the offer described below (the
“Change of Control Offer”).
In the Change of Control Offer, we will be required to offer payment in cash equal to 101% of the aggregate principal amount of
2033 Notes repurchased plus accrued and unpaid interest, if any, on the 2033 Notes repurchased to, but not including, the date of
purchase (the “Change of Control Payment”).
“Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the
assets of us and our Subsidiaries taken as a whole to any Person or group of related Persons for purposes of Section 13(d) of the
Exchange Act (a “Group”) other than us or one of our subsidiaries; (2) the approval by the holders of our common stock of any plan or
proposal for our liquidation or
dissolution; (3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is
that any Person or Group becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of
shares of our Voting Stock; or (4) the first day on which a majority of the members of our board of directors are not Continuing
Directors.
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control if (1) we become a direct or
indirect wholly owned subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding
company immediately following that transaction are substantially the same as the holders of our Voting Stock immediately prior to that
transaction or (B) immediately following that transaction no Person or Group (other than a holding company satisfying the
requirements of this sentence) is the beneficial owner, directly or indirectly of more than 50% of the Voting Stock of such holding
company.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating
Event (as such term is defined in the indenture) occurring in respect of that Change of Control.
“Continuing Directors” means, as of any date of determination, any member of our board of directors who (1) was a member of
our board of directors on the date of the issuance of the 2033 Notes; or (2) was nominated or approved for election, elected or appointed
to our board of directors with the approval of a majority of the Continuing Directors who were members of our board of directors at the
time of such nomination, approval, election or appointment (either by a specific vote or by approval of the proxy statement issued by us
in which such member was named as a nominee for election as a director).
“Person” means any individual, firm, limited liability company, corporation, partnership, association, joint venture, tribunal,
trust, government or political subdivision or agency or instrumentality thereof, or any other entity or organization and includes a
“person” as used in Section 13(d)(3) of the Exchange Act.
“Voting Stock” of any specified Person as of any date means the capital stock of such Person that is at the time entitled to vote
generally in the election of the board of directors of such Person.
The definition of “Change of Control” includes a phrase relating to the sale, transfer, conveyance or other disposition of “all or
substantially all” of our consolidated assets. There is no precise, established definition of the phrase “substantially all” under applicable
law.
Accordingly, your ability to require us to purchase your 2033 Notes as a result of the sale, transfer, conveyance or other disposition of
less than all of our assets may be uncertain.
Certain Covenants
The indenture contains, among others, restrictive covenants regarding (i) our ability to consolidate or merge with another entity
or to sell, transfer or otherwise convey all or substantially all of our assets to another entity, (ii) create or permit certain significant
subsidiaries to create or permit to exist certain liens and (iii) certain sale and lease-back transactions involving certain subsidiaries.
Events of Default
Holders of the 2033 Notes will have specified rights if an Event of Default (as defined below) occurs. The term “Event of
Default” in respect of the 2033 Notes means any of the following:
(1)
(2)
(3)
(4)
we do not pay interest on any of the 2033 Notes within 30 days of its due date;
we fail to pay the principal (or premium, if any) of any 2033 Note, when such principal becomes due and payable, at
maturity, upon acceleration, upon redemption or otherwise;
we fail to comply with certain covenants under the indenture;
we remain in breach of a covenant or warranty in respect of the indenture or 2033 Notes (other than a covenant
included in the indenture solely for the benefit of debt securities of another series) for 90 days after we receive a written
notice of default, which notice must be sent by either the trustee or holders of at least 25% in principal amount of the
outstanding 2033 Notes;
(5)
we file for bankruptcy, or other events of bankruptcy, insolvency or reorganization specified in the indenture;
(6)
(7)
we default on any indebtedness of ours or of a significant subsidiary having an aggregate amount of at least
$200,000,000, constituting a default either of payment of principal when due and payable or which results in
acceleration of the indebtedness unless the default has been cured or waived or the indebtedness discharged in full
within 60 days after we have been notified of the default by the trustee or holders of at least 25% of the outstanding
2033 Notes; or
one or more final judgments for the payment of money in an aggregate amount in excess of $200,000,000 above
available insurance or indemnity coverage shall be rendered against us or any significant subsidiary and the same shall
remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed.
If an Event of Default (other than an Event of Default specified in clause (5) above) with respect to the 2033 Notes has occurred, the
trustee or the holders of at least 25% in principal amount of the 2033 Notes may declare the entire unpaid principal amount of (and
premium, if any), and all the accrued interest on, the Notes to be due and immediately payable. This is called a declaration of
acceleration of maturity. There is no action on the part of the trustee or any holder of the 2033 Notes required for such declaration if the
Event of Default is the Company’s bankruptcy, insolvency or reorganization. Holders of a majority in principal amount of the 2033
Notes may also waive certain past defaults under the indenture with respect to the 2033 Notes on behalf of all of the holders of the 2033
Notes. A declaration of acceleration of maturity may be canceled, under specified circumstances, by the holders of at least a majority in
principal amount of the 2033 Notes and the trustee.
Except in cases of default, where the trustee has special duties, the trustee is not required to take any action under the indenture at the
request of holders unless the holders offer the trustee protection from expenses and liability satisfactory to the trustee. If an indemnity
satisfactory to the trustee is provided, the holders of a majority in principal amount of 2033 Notes may direct the time, method and
place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to
follow those directions in certain circumstances specified in the indenture. No delay or omission in exercising any right or remedy will
be treated as a waiver of the right, remedy or Event of Default.
Modification of the Indenture and Waiver of Rights of Holders
Under certain circumstances, we can make changes to the indenture and the 2033 Notes. Some types of changes require the approval of
each holder of 2033 Notes, some require approval by a vote of a majority of the holders of the 2033 Notes, and some changes do not
require any approval at all.
Description of the 0.875% Senior Notes Due 2030
The 0.875% Senior Notes due 2030 (the “2030 Notes”) were issued under an indenture, dated as of June 7, 2013 (the “base
indenture”) between Nasdaq, Inc. and Wells Fargo Bank, National Association, as trustee (the “Trustee”) and a seventh supplemental
indenture dated as of February 13, 2020 (the “supplemental indenture” and, together with the base indenture, the “indenture”). The
indenture is publicly available at www.sec.gov.
We issued €600 million aggregate principal amount of the 2030 Notes on February 13, 2020.
This summary is subject to, and qualified in its entirety by reference to, all the provisions of the 2030 Notes and the indenture,
including definitions of certain terms used therein.
General
The 2030 Notes:
•
•
•
•
are senior unsecured obligations of ours;
rank equally in right of payment with all of our other senior unsecured indebtedness from time to time outstanding,
commercial paper issuances and indebtedness under our credit facility;
are structurally subordinated in right of payment to all existing and future obligations of our subsidiaries, including
claims with respect to trade payables; and
are effectively subordinated in right of payment to all of our existing and future secured indebtedness and other secured
obligations to the extent of the value of the collateral securing any such indebtedness and other obligations.
The 2030 Notes were issued in minimum denominations of €100,000 and integral multiples of €1,000 in excess thereof.
Principal, Maturity and Interest
The 2030 Notes will bear interest at a rate of 0.875% per year. Interest on the Notes is payable annually in arrears on February
13 of each year, beginning on February 13, 2021, and will be computed on the basis of the actual number of days in the period for
which interest is being calculated and the actual number of days from and including the last date on which interest was paid on the 2030
Notes (or the settlement date if no interest has been paid or duly provided for on the 2030 Notes), to but excluding the next date on
which interest is paid or duly provided for. This payment convention is referred to as ACTUAL/ACTUAL (ICMA) as defined in the
rulebook of the International Capital Market Association. Interest on the 2030 Notes will accrue from and including the settlement date
and will be paid to holders of record on the day immediately prior to the applicable interest payment date.
The 2030 Notes will mature on February 13, 2030. On the maturity date of the 2030 Notes, the holders will be entitled to
receive 100% of the principal amount of such 2030 Notes. The 2030 2030 Notes will not have the benefit of any sinking fund.
If any interest payment date, redemption date or maturity date falls on a day that is not a business day, then the relevant payment
may be made on the next succeeding business day and no interest will accrue because of such delayed payment. With respect to the
2030 Notes, when we use the term “business day” we mean any day except a Saturday, a Sunday or a day on which banking institutions
in the applicable place of payment are authorized or required by law, regulation or executive order to close.
Claims against the Company for payment of principal, interest and additional amounts, if any, on the 2030 Notes will become
void unless presentment for payment is made (where so required under the indenture) within, in the case of principal and additional
amounts, if any, a period of ten years or, in the case of interest, a period of five years, in each case from the applicable original date of
payment therefor.
Euro Notes—Issuance in Euros
Initial holders of the 2030 Notes paid for the 2030 Notes in euros, and principal, premium, if any, and interest payments and
additional amounts, if any, in respect of the 2030 Notes will be payable in euros. If, on or after the date of this prospectus supplement,
the euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control or the euro is no
longer used by the then member states of the European Monetary Union that have adopted the euro as their currency or for the
settlement of transactions by public institutions within the international banking community, then all payments in respect of the 2030
Notes will be made in U.S. dollars until the euro is again available to us or so used.
The amount payable on any date in euros will be converted to U.S. dollars on the basis of the most recently available market
exchange rate for euros as determined by us in our sole discretion. Any payment in respect of the 2030 Notes so made in U.S. dollars
will not constitute an event of default under the indenture or the 2030 Notes. Neither the trustee nor the paying agent will be responsible
for obtaining exchange rates, effecting conversions or otherwise handling redenominations.
Ranking
The 2030 Notes are general unsecured obligations of ours and will rank equally with all of our existing and future
unsubordinated obligations.
Holders of any secured indebtedness and other secured obligations of the Company will have claims that are prior to your
claims as holders of the 2030 Notes, to the extent of the value of the assets securing such indebtedness and other obligations, in the
event of any bankruptcy, liquidation or similar proceeding.
Further Issues
The 2030 Notes constituted a separate series of debt securities under the indenture, limited to €600 million. Under the indenture,
we may, without the consent of the holders of the 2030 Notes, issue additional 2030 Notes of the same or a different series from time to
time in the future in an unlimited aggregate principal amount; provided that if any such additional 2030 Notes are not fungible with the
2030 Notes offered hereby (or any other tranche of additional 2030 Notes) for U.S. federal income tax purposes, then such additional
2030 Notes will have different ISIN and/or Common Code numbers than the Notes offered hereby (and any such other tranche of
additional 2030 Notes). The 2030 Notes and any additional 2030 Notes of the same series would rank equally and ratably and would be
treated as a single class for all purposes under the indenture. This means that, in circumstances where the indenture provides for the
holders of debt securities of any series to vote or take any action, any of the outstanding 2030 Notes, as well as any additional 2030
Notes that we may issue by reopening such series, will vote or take action as a single class.
Redemption
Optional Redemption
The 2030 Notes will be redeemable, in whole at any time or in part from time to time, at our option, at a redemption price (the
“make-whole redemption price”) equal to the greater of (i) 100% of the principal amount of the 2030 Notes and (ii) as determined by
the Quotation Agent
(as defined below), the sum of the present values of the remaining scheduled payments of principal and interest on the 2030 Notes
(exclusive of interest accrued and unpaid as of the date of redemption), discounted to the date of redemption on an annual basis
(ACTUAL/ACTUAL (ICMA)) at the Bund Rate (as defined below), plus 20 basis points, plus accrued and unpaid interest thereon to
the date of redemption. However, if the redemption date is after a record date and on or prior to a corresponding interest payment date,
the interest will be paid on the redemption date to the holder of record on the record date.
Notwithstanding the foregoing, at any time on or after November 13, 2029 (three months before their maturity date), the 2030
Notes will be redeemable, in whole or in part, at our option and at any time or from time to time, at a redemption price equal to 100%
of the principal amount of the 2030 Notes to be redeemed plus accrued and unpaid interest thereon to, but excluding, the date of
redemption.
Notice of any redemption will be mailed at least 30 days, but not more than 60 days, before the redemption date to each
registered holder of 2030 Notes to be redeemed. Once notice of redemption is mailed, the 2030 Notes called for redemption will
become due and payable on the redemption date and at the applicable redemption price, plus accrued and unpaid interest to, but not
including, the redemption date. Unless we default in payment of the redemption price, on and after the redemption date, interest will
cease to accrue on the 2030 Notes (or portion thereof) to be redeemed on such redemption date.
“Bund Rate” means, with respect to any redemption date, the rate per annum equal to the annual equivalent yield to maturity of
the Comparable German Bund Issue, assuming a price for the Comparable German Bund Issue (expressed as a percentage of its
principal amount) equal to the Comparable German Bund Price for such redemption date.
“Comparable German Bund Issue” means that German Bundesanleihe security selected by the Quotation Agent as having a
maturity comparable to the remaining term of the 2030 Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary
financial practice, in pricing new issues of corporate notes of comparable maturity to the remaining term of the Notes.
“Comparable German Bund Price” means, with respect to any redemption date, (i) the average of four Reference German Bund
Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference German Bund Dealer Quotations or
(ii) if the Quotation Agent obtains fewer than four such Reference German Bund Dealer Quotations, the average of all such quotations.
“Quotation Agent” means a Reference German Bund Dealer appointed by us.
“Reference German Bund Dealer” means any dealer of German Bundesanleihe securities selected by us in good faith.
“Reference German Bund Dealer Quotations” means, with respect to each Reference German Bund Dealer and any redemption
date, the average, as determined by us, of the bid and asked prices for the Comparable German Bund Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference German Bund Dealer at 3:30 p.m.,
Frankfurt, Germany time, on the third business day preceding such redemption date.
If we elect to redeem less than all of the 2030 Notes, and such 2030 Notes are at the time represented by a global note, then the
depositary will select by lot the particular interests to be redeemed. If we elect to redeem less than all of the 2030 Notes, and any of
such 2030 Notes are not represented by a global note, then the trustee will select the particular 2030 Notes to be redeemed in a manner
it deems appropriate and fair (and the depositary will select by lot the particular interests in any global note to be redeemed).
We may at any time, and from time to time, purchase the 2030 Notes at any price or prices in the open market or otherwise.
Repurchase upon Change of Control Triggering Event
If a Change of Control Triggering Event (as defined below) occurs with respect to the 2030 Notes, unless we have exercised our
right to redeem the 2030 Notes, we will be required to make an offer to repurchase all or, at the holder’s option, any part (equal to
€100,000 or any integral multiple of €1,000 in excess thereof) of each holder’s 2030 Notes pursuant to the offer described below (the
“Change of Control Offer”).
In the Change of Control Offer, we will be required to offer payment in cash equal to 101% of the aggregate principal amount of
2030 Notes repurchased plus accrued and unpaid interest, if any, on the 2030 Notes repurchased to, but not including, the date of
purchase (the “Change of Control Payment”).
“Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or substantially all of the assets of us and our Subsidiaries taken as a
whole to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a “Group”) other than us or one of
our subsidiaries; (2) the approval by the holders of our common stock of any plan or proposal for our liquidation or dissolution; (3) the
consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person or
Group becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of shares of our Voting
Stock; or (4) the first day on which a majority of the members of our board of directors are not Continuing Directors.
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control if (1) we become a direct or
indirect wholly owned subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding
company immediately following that transaction are substantially the same as the holders of our Voting Stock immediately prior to that
transaction or (B) immediately following that transaction no Person or Group (other than a holding company satisfying the
requirements of this sentence) is the beneficial owner, directly or indirectly of more than 50% of the Voting Stock of such holding
company.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating
Event (as such term is defined in the indenture) occurring in respect of that Change of Control.
“Continuing Directors” means, as of any date of determination, any member of our board of directors who (1) was a member of
our board of directors on the date of the issuance of the 2030 Notes; or (2) was nominated or approved for election, elected or appointed
to our board of directors with the approval of a majority of the Continuing Directors who were members of our board of directors at the
time of such nomination, approval, election or appointment (either by a specific vote or by approval of the proxy statement issued by us
in which such member was named as a nominee for election as a director).
“Person” means any individual, firm, limited liability company, corporation, partnership, association, joint venture, tribunal,
trust, government or political subdivision or agency or instrumentality thereof, or any other entity or organization and includes a
“person” as used in Section 13(d)(3) of the Exchange Act.
“Voting Stock” of any specified Person as of any date means the capital stock of such Person that is at the time entitled to vote
generally in the election of the board of directors of such Person.
The definition of “Change of Control” includes a phrase relating to the sale, transfer, conveyance or other disposition of “all or
substantially all” of our consolidated assets. There is no precise, established definition of the phrase “substantially all” under applicable
law. Accordingly, your ability to require us to purchase your 2030 Notes as a result of the sale, transfer, conveyance or other disposition
of less than all of our assets may be uncertain.
Certain Covenants
The indenture contains, among others, restrictive covenants regarding (i) our ability to consolidate or merge with another entity
or to sell, transfer or otherwise convey all or substantially all of our assets to another entity, (ii) create or permit certain significant
subsidiaries to create or permit to exist certain liens and (iii) certain sale and lease-back transactions involving certain subsidiaries.
Events of Default
Holders of the 2030 Notes will have specified rights if an Event of Default (as defined below) occurs. The term “Event of
Default” in respect of the 2030 Notes means any of the following:
(1)
(2)
(3)
(4)
we do not pay interest on any of the 2030 Notes within 30 days of its due date;
we fail to pay the principal (or premium, if any) of any 2030 Note, when such principal becomes due and payable, at
maturity, upon acceleration, upon redemption or otherwise;
we fail to comply with certain covenants under the indenture;
we remain in breach of a covenant or warranty in respect of the indenture or 2030 Notes (other than a covenant
included in the indenture solely for the benefit of debt securities of another series) for 90 days after we receive a written
notice of default, which notice must be sent by either the trustee or holders of at least 25% in principal amount of the
outstanding 2030 Notes;
(5)
(6)
(7)
we file for bankruptcy, or other events of bankruptcy, insolvency or reorganization specified in the indenture;
we default on any indebtedness of ours or of a significant subsidiary having an aggregate amount of at least
$150,000,000, constituting a default either of payment of principal when due and payable or which results in
acceleration of the indebtedness unless the default has been cured or waived or the indebtedness discharged in full
within 60 days after we have been notified of the default by the trustee or holders of at least 25% of the outstanding
2030 Notes; or
one or more final judgments for the payment of money in an aggregate amount in excess of $150,000,000 above
available insurance or indemnity coverage shall be rendered against us or any significant subsidiary and the same shall
remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed.
If an Event of Default (other than an Event of Default specified in clause (5) above) with respect to the 2030 Notes has occurred, the
trustee or the holders of at least 25% in principal amount of the 2030 Notes may declare the entire unpaid principal amount of (and
premium, if any), and all the accrued interest on, the Notes to be due and immediately payable. This is called a declaration of
acceleration of maturity. There is no action on the part of the trustee or any holder of the 2030 Notes required for such declaration if the
Event of Default is the Company’s bankruptcy, insolvency or reorganization. Holders of a majority in principal amount of the 2030
Notes may also waive certain past defaults under the indenture with respect to the 2030 Notes on behalf of all of the holders of the 2030
Notes. A declaration of acceleration of maturity may be canceled, under specified circumstances, by the holders of at least a majority in
principal amount of the 2030 Notes and the trustee.
Except in cases of default, where the trustee has special duties, the trustee is not required to take any action under the indenture at the
request of holders unless the holders offer the trustee protection from expenses and liability satisfactory to the trustee. If an indemnity
satisfactory to the trustee is provided, the holders of a majority in principal amount of 2030 Notes may direct the time, method and
place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to
follow those directions in certain circumstances specified in the indenture. No delay or omission in exercising any right or remedy will
be treated as a waiver of the right, remedy or Event of Default.
Modification of the Indenture and Waiver of Rights of Holders
Under certain circumstances, we can make changes to the indenture and the 2030 Notes. Some types of changes require the approval of
each holder of 2030 Notes, some require approval by a vote of a majority of the holders of the 2030 Notes, and some changes do not
require any approval at all.
Description of the 1.75% Senior Notes Due 2029
The 1.75% Senior Notes due 2029 (the “2029 Notes”) were issued under an indenture, dated as of June 7, 2013 (the “base
indenture”) between Nasdaq, Inc. and Wells Fargo Bank, National Association, as trustee (the “Trustee”) and a sixth supplemental
indenture dated as of April 1, 2019 (the “supplemental indenture” and, together with the base indenture, the “indenture”). The indenture
is publicly available at www.sec.gov.
We issued €600 million aggregate principal amount of the 2029 Notes on April 1, 2019.
This summary is subject to, and qualified in its entirety by reference to, all the provisions of the 2029 Notes and the indenture,
including definitions of certain terms used therein.
General
The 2029 Notes:
•
•
•
•
are senior unsecured obligations;
rank equally in right of payment with all of our other senior unsecured indebtedness from time to time outstanding,
commercial paper issuances and indebtedness under our 2017 credit facility;
are structurally subordinated in right of payment to all existing and future obligations of our subsidiaries, including claims
with respect to trade payables; and
are effectively subordinated in right of payment to all of our existing and future secured indebtedness and other secured
obligations to the extent of the value of the collateral securing any such indebtedness and other obligations.
The 2029 Notes were issued in minimum denominations of €100,000 and integral multiples of €1,000 in excess thereof.
Principal, Maturity and Interest
The 2029 Notes bear interest at a rate of 1.75% per year. Interest on the 2029 Notes is payable annually in arrears on of each year,
beginning on March 28, 2020, and is computed on the basis of the actual number of days in the period for which interest is being
calculated and the actual number of days from and including the last date on which interest was paid on the 2029 Notes (or the
settlement date if no interest has been paid or duly provided for on the 2029 Notes), to but excluding the next date on which interest is
paid or duly provided for. This payment convention is referred to as ACTUAL/ACTUAL (ICMA) as defined in the rulebook of the
International Capital Market Association. Interest on the 2029 Notes accrues from and including the settlement date and will be paid to
holders of record on the day immediately prior to the applicable interest payment date.
The 2029 Notes will mature on March 28, 2029. On the maturity date of the 2029 Notes, the holders will be entitled to receive
100% of the principal amount of such 2029 Notes. The 2029 Notes will not have the benefit of any sinking fund.
If any interest payment date, redemption date or maturity date falls on a day that is not a business day, then the relevant payment
may be made on the next succeeding business day and no interest will accrue because of such delayed payment. With respect to the
2029 Notes, when we use the term “business day” we mean any day except a Saturday, a Sunday or a day on which banking institutions
in the applicable place of payment are authorized or required by law, regulation or executive order to close.
Claims against the Company for payment of principal, interest and additional amounts, if any, on the 2029 Notes will become void
unless presentment for payment is made (where so required under the indenture) within, in the case of principal and additional amounts,
if any, a period of ten years or, in the case of interest, a period of five years, in each case from the applicable original date of payment
therefor.
Euro Notes—Issuance in Euros
Initial holders of the 2029 Notes paid for the 2029 Notes in euros, and principal, premium, if any, and interest payments and
additional amounts, if any, in respect of the Notes will be payable in euros. If the euro is unavailable to us due to the imposition of
exchange controls or other circumstances beyond our control or the euro is no longer used by the then member states of the European
Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions within the
international banking community, then all payments in respect of the 2029 Notes will be made in U.S. dollars until the euro is again
available to us or so used.
The amount payable on any date in euros will be converted to U.S. dollars on the basis of the most recently available market
exchange rate for euros as determined by us in our sole discretion. Any payment in respect of the 2029 Notes so made in U.S. dollars
will not constitute an event of default under the indenture or the 2029 Notes. Neither the trustee nor the paying agent will be responsible
for obtaining exchange rates, effecting conversions or otherwise handling redenominations.
Interest Rate Adjustment
The interest rate payable on the 2029 Notes will be subject to adjustment from time to time if either Moody’s or S&P, or, in either
case, any substitute rating agency downgrades (or subsequently upgrades) the credit rating assigned to the 2029 Notes.
Ranking
The 2029 Notes are general unsecured obligations of ours and rank equally with all of our existing and future unsubordinated
obligations.
Holders of any secured indebtedness and other secured obligations of the Company will have claims that are prior to claims as
holders of the 2029 Notes, to the extent of the value of the assets securing such indebtedness and other obligations, in the event of any
bankruptcy, liquidation or similar proceeding.
Further Issues
The 2029 Notes constituted a separate series of debt securities under the indenture, limited to €600 million. Under the indenture,
we may, without the consent of the holders of the 2029 Notes, issue additional 2029 Notes of the same or a different series from time to
time in the future in an unlimited aggregate principal amount; provided, that, if any such additional 2029 Notes are not fungible with
the 2029 Notes (or any other tranche of additional 2029 Notes) for U.S. federal income tax purposes, then such additional 2029 Notes
will have different ISIN and/or Common Code numbers than the 2029 Notes (and any such other tranche of additional 2029 Notes).
The 2029 Notes and any additional 2029 Notes of the same series would rank equally and ratably and would be treated as a single class
for all purposes under the indenture. This means that, in circumstances where the indenture provides for the holders of debt securities of
any series to vote or take any action, any of the outstanding 2029 Notes, as well as any additional 2029 Notes that we may issue by
reopening such series, will vote or take action as a single class.
Redemption
Optional Redemption
The 2029 Notes will be redeemable, in whole at any time or in part from time to time, at our option, at a redemption price (the
“make-whole redemption price”) equal to the greater of (i) 100% of the principal amount of the 2029 Notes, and (ii) as determined by
the Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of principal and interest on
the 2029 Notes (exclusive of interest accrued and unpaid as of the date of redemption), discounted to the date of redemption on an
annual basis (ACTUAL/ACTUAL (ICMA)) at the Bund Rate (as defined below), plus 30 basis points, plus accrued and unpaid interest
thereon to the date of redemption. However, if the redemption date is after a record date and on or prior to a corresponding interest
payment date, the interest will be paid on the redemption date to the holder of record on the record date.
Notwithstanding the foregoing, at any time on or after December 28, 2028 (three months before their maturity date), the 2029
Notes will be redeemable, in whole or in part, at our option and at any time or from time to time, at a redemption price equal to 100%
of the principal amount of the 2029 Notes to be redeemed plus accrued and unpaid interest thereon to, but excluding, the date of
redemption.
Notice of any redemption will be mailed at least 30 days, but not more than 60 days, before the redemption date to each registered
holder of 2029 Notes to be redeemed. Once notice of redemption is mailed, the 2029 Notes called for redemption will become due and
payable on the redemption date and at the applicable redemption price, plus accrued and unpaid interest to, but not including, the
redemption date. Unless we default in payment of the redemption price, on and after the redemption date, interest will cease to accrue
on the 2029 Notes (or portion thereof) to be redeemed on such redemption date.
“Bund Rate” means, with respect to any redemption date, the rate per annum equal to the annual equivalent yield to maturity of the
Comparable German Bund Issue, assuming a price for the Comparable German Bund Issue (expressed as a percentage of its principal
amount) equal to the Comparable German Bund Price for such redemption date.
“Comparable German Bund Issue” means that German Bundesanleihe security selected by the Quotation Agent as having a
maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate notes of comparable maturity to the remaining term of
the Notes.
“Comparable German Bund Price” means, with respect to any redemption date, (i) the average of four Reference German Bund
Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference German Bund Dealer Quotations, or
(ii) if the Quotation Agent obtains fewer than four such Reference German Bund Dealer Quotations, the average of all such quotations.
“Quotation Agent” means a Reference German Bund Dealer appointed by us.
“Reference German Bund Dealer” means any dealer of German Bundesanleihe securities selected by us in good faith.
“Reference German Bund Dealer Quotations” means, with respect to each Reference German Bund Dealer and any redemption
date, the average, as determined by us, of the bid and asked prices for the Comparable German Bund Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference German Bund Dealer at 3:30 p.m.,
Frankfurt, Germany time, on the third business day preceding such redemption date.
If we elect to redeem less than all of the 2029 Notes, and such 2029 Notes are at the time represented by a global note, then the
depositary will select by lot the particular interests to be redeemed. If we elect to redeem less than all of the 2029 Notes, and any of
such 2029 Notes are not represented by a global note, then the trustee will select the particular 2029 Notes to be redeemed in a manner
it deems appropriate and fair (and the depositary will select by lot the particular interests in any global note to be redeemed).
We may at any time, and from time to time, purchase the 2029 Notes at any price or prices in the open market or otherwise.
Repurchase upon Change of Control Triggering Event
If a Change of Control Triggering Event (as defined below) occurs with respect to the 2029 Notes, unless we have exercised our
right to redeem the 2029 Notes, we are required to make an offer to repurchase all or, at the holder’s option, any part (equal to €100,000
or any integral multiple of €1,000 in excess thereof) of each holder’s 2029 Notes pursuant to the offer described below (the “Change of
Control Offer”).
In the Change of Control Offer, we will be required to offer payment in cash equal to 101% of the aggregate principal amount of
2029 Notes repurchased plus accrued and unpaid interest, if any, on the Notes repurchased to, but not including, the date of purchase
(the “Change of Control Payment”).
“Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the
assets of us and our Subsidiaries taken as a whole to any Person or group of related Persons for purposes of Section 13(d) of the
Exchange Act (a “Group”) other than us or one of our subsidiaries; (2) the approval by the holders of our common stock of any plan or
proposal for our liquidation or dissolution; (3) the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any Person or Group becomes the beneficial owner, directly or indirectly, of more than 50% of
the then outstanding number of shares of our Voting Stock; or (4) the first day on which a majority of the members of our board of
directors are not Continuing Directors.
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control if (1) we become a direct or
indirect wholly owned Subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding
company immediately following that transaction are substantially the same as the holders of our Voting Stock immediately prior to that
transaction or (B) immediately following that transaction no Person or Group (other than a holding company satisfying the
requirements of this sentence) is the beneficial owner, directly or indirectly of more than 50% of the Voting Stock of such holding
company.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating
Event (as such term is defined in the indenture) occurring in respect of that Change of Control.
“Continuing Directors” means, as of any date of determination, any member of our board of directors who (1) was a member of
our board of directors on the date of the issuance of the Notes; or (2) was nominated or approved for election, elected or appointed to
our board of directors with the approval of a majority of the Continuing Directors who were members of our board of directors at the
time of such nomination, approval, election or appointment (either by a specific vote or by approval of the proxy statement issued by us
in which such member was named as a nominee for election as a director).
“Person” means any individual, firm, limited liability company, corporation, partnership, association, joint venture, tribunal, trust,
government or political subdivision or agency or instrumentality thereof, or any other entity or organization and includes a “person” as
used in Section 13(d)(3) of the Exchange Act.
“Voting Stock” of any specified Person as of any date means the capital stock of such Person that is at the time entitled to vote
generally in the election of the board of directors of such Person.
The definition of “Change of Control” includes a phrase relating to the sale, transfer, conveyance or other disposition of “all or
substantially all” of our consolidated assets. There is no precise, established definition of the phrase “substantially all” under applicable
law. Accordingly, the ability to require us to purchase 2029 Notes as a result of the sale, transfer, conveyance or other disposition of less
than all of our assets may be uncertain.
Certain Covenants
The indenture contains, among others, restrictive covenants regarding (i) our ability to consolidate or merge with another entity or
to sell, transfer or otherwise convey all or substantially all of our assets to another entity; (ii) create or permit certain significant
subsidiaries to create or permit to exist certain liens and (iii) certain sale and lease-back transactions involving certain subsidiaries.
Events of Default
Holders of the 2029 Notes will have specified rights if an Event of Default (as defined below) occurs. The term “Event of Default”
in respect of the Notes means any of the following:
(1)
(2)
(3)
(4)
we do not pay interest on any of the Notes within 30 days of its due date;
we fail to pay the principal (or premium, if any) of any Note, when such principal becomes due and payable, at maturity,
upon acceleration, upon redemption or otherwise;
failure by us to comply with the covenants under the indenture;
we remain in breach of a covenant or warranty in respect of the indenture or 2029 Notes (other than a covenant included
in the indenture solely for the benefit of debt securities of another series) for 90 days after we receive a written notice of
default, which notice must be sent by either the trustee or holders of at least 25% in principal amount of the outstanding
2029 Notes;
(5)
we file for bankruptcy, or other events of bankruptcy, insolvency or reorganization specified in the indenture;
(6)
(7)
we default on any indebtedness of ours or of a significant subsidiary having an aggregate amount of at least
$150,000,000, constituting a default either of payment of principal when due and payable or which results in
acceleration of the indebtedness unless the default has been cured or waived or the indebtedness discharged in full within
60 days after we have been notified of the default by the trustee or holders of at least 25% of the outstanding 2029
Notes; or
one or more final judgments for the payment of money in an aggregate amount in excess of $150,000,000 above
available insurance or indemnity coverage shall be rendered against us or any significant subsidiary and the same shall
remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed.
If an Event of Default (other than an Event of Default specified in clause (5) above) with respect to the 2029 Notes has occurred, the
Trustee or the holders of at least 25% in principal amount of
the 2029 Notes may declare the entire unpaid principal amount of (and premium, if any), and all the accrued interest on, the Notes to be
due and immediately payable. This is called a declaration of acceleration of maturity. There is no action on the part of the trustee or any
holder of the 2029 Notes required for such declaration if the Event of Default is the Company’s bankruptcy, insolvency or
reorganization. Holders of a majority in principal amount of the Notes may also waive certain past defaults under the indenture with
respect to the 2029 Notes on behalf of all of the holders of the 2029 Notes. A declaration of acceleration of maturity may be canceled,
under specified circumstances, by the holders of at least a majority in principal amount of the 2029 Notes and the trustee.
Except in cases of default, where the trustee has special duties, the trustee is not required to take any action under the indenture at
the request of holders unless the holders offer the trustee protection from expenses and liability satisfactory to the trustee. If an
indemnity satisfactory to the trustee is provided, the holders of a majority in principal amount of 2029 Notes may direct the time,
method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may
refuse to follow those directions in certain circumstances specified in the indenture. No delay or omission in exercising any right or
remedy will be treated as a waiver of the right, remedy or Event of Default.
Before holders of the 2029 Notes are allowed to bypass the trustee and bring a lawsuit or other formal legal action or take other
steps to enforce their rights or protect their interests relating to the 2029 Notes, the following must occur:
•
•
such holders must give the trustee written notice that an Event of Default has occurred and remains uncured;
holders of at least 25% in principal amount of the 2029 Notes must make a written request that the trustee take action
because of the default and must offer the Trustee indemnity satisfactory to the trustee against the cost and other liabilities
of taking that action; and
•
the trustee must have failed to take action for 60 days after receipt of the notice and offer of indemnity.
Holders are, however, entitled at any time to bring a lawsuit for the payment of money due on the 2029 Notes on or after the due
date.
Modification of the Indenture and Waiver of Rights of Holders
Under certain circumstances, we can make changes to the indenture and the 2029 Notes. Some types of changes require the
approval of each holder of 2029 Notes, some require approval by a vote of a majority of the holders of the 2029 Notes, and some
changes do not require any approval at all.
Nasdaq, Inc.
Change in Control Severance Plan
For Non-CEO Presidents, Executive Vice Presidents and Senior Vice Presidents
Effective November 26, 2013 (as amended December 6, 2022)
Exhibit 10.19
1.
2.
Purpose. The Nasdaq Change in Control Severance Pay Plan (the “Plan”) has been established by Nasdaq, Inc. ( “Nasdaq” or “the Company”), effective as
of November 26, 2013 (as amended December 6, 2022) (“Effective Date”) to promote the long-term financial interests of the Company and its shareholders
by (i) providing key employees of the Company and its subsidiaries with assurances of fair and equitable treatment as well as severance benefits consistent
with competitive practices in the event of a Change in Control of the Company and (ii) reducing the risk of departures and distractions of such employees in
a Change in Control situation which would be detrimental to the Company and its shareholders.
Definitions. As used in this Plan, the following terms shall have the meanings set forth below:
(a)
(b)
(c)
“Board” means the Board of Directors of Nasdaq, Inc.
“Cause” means, for Executives employed in the United States, (i) the Executive’s conviction of, or pleading nolo contendere to, any crime, whether a
felony or misdemeanor, involving the purchase or sale of any security, mail or wire fraud, theft, embezzlement, moral turpitude, or Nasdaq or its
affiliates’ property (with the exception of minor traffic violations or similar misdemeanors); (ii) the Executive’s repeated neglect of his or her duties;
or (iii) the Executive’s willful misconduct in connection with the performance of his or her duties. For Executives employed outside of the United
States, “Cause” shall be defined consistent with the requirements of local law in the jurisdiction where the Executive is regularly assigned to work.
“Change in Control” means the first to occur of any one of the following events:
(i)
any “Person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) is or becomes
the beneficial owner, directly or indirectly, of more than 50% of the Voting Securities (not including any securities acquired directly (or
through an underwriter) from Nasdaq), except a Person shall not include:
(A) Nasdaq;
(B)
any Person who becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of Nasdaq’s
then outstanding securities eligible to vote in the election of the Board (“Voting Securities”) as a result of a reduction in the number of
Voting Securities outstanding due to the repurchase of Voting Securities by Nasdaq unless and until such Person, after becoming aware
that such Person has become the beneficial owner of more than 50% of the then outstanding Voting Securities, acquires beneficial
ownership of additional Voting Securities representing 1% or more of the Voting Securities then outstanding,
(C)
any trustee or other fiduciary holding securities under an employee benefit plan of Nasdaq, or
(D)
any entity owned, directly or indirectly, by the stockholders of Nasdaq in substantially the same proportions as their ownership of
Voting Securities is or becomes the beneficial owner, directly or indirectly, of more than 50% of the Voting Securities (not including
any securities acquired directly (or through an underwriter) from Nasdaq or the Companies;
(ii)
(iii)
(iv)
the date on which, within any twelve (12) month period (beginning on or after the Effective Date), a majority of the directors then serving on
the Board are replaced by directors not endorsed by at least two-thirds (2/3) of the members of the Board before the date of appointment or
election;
there is consummated a merger or consolidation of Nasdaq with any other corporation or entity or Nasdaq issues Voting Securities in
connection with a merger or consolidation of any direct or indirect subsidiary of Nasdaq with any other corporation, other than:
(A)
a merger or consolidation that would result in the Voting Securities outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of the surviving or parent entity) more than 50% of
Nasdaq’s then outstanding Voting Securities or more than 50% of the combined voting power of such surviving or parent entity
outstanding immediately after such merger or consolidation or
(B)
a merger or consolidation effected to implement a recapitalization of Nasdaq (or similar transaction) in which no Person, directly or
indirectly, acquired more than 50% of Nasdaq’s then outstanding Voting Securities (not including any securities acquired directly (or
through an underwriter) from Nasdaq or the Companies); or
the consummation of an agreement for the sale or disposition by Nasdaq of all or substantially all of Nasdaq’s assets (or any transaction
having a similar effect), provided that such agreement or transaction of similar effect shall in all events require the disposition, within any
twelve (12) month period, of at least 40% of the gross fair market value of all of Nasdaq’s then assets; other than a sale or disposition by
Nasdaq of all or substantially all of Nasdaq’s assets to an entity, at least 50% of the combined voting power of the voting securities of which
are owned directly or indirectly by stockholders of Nasdaq in substantially the same proportions as their ownership of Nasdaq immediately
prior to such sale.
Notwithstanding anything in this Plan to the contrary, to the extent any provision of this Plan would cause a payment or benefit not exempt from
the requirements of Code Section 409A to be made because of the occurrence of a Change in Control, then such payment or benefit shall not be
made unless such Change in Control also constitutes a “change in ownership”, “change in effective control” or “change in ownership of a
substantial portion of the Company’s assets” within the meaning of Code section 409A. Any payment that would have been made except for the
application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a
Change in Control (and other Executive rights that are tied to a Change in Control shall not be affected by this paragraph).
“Companies” shall mean Nasdaq or any of its affiliates.
“Disability” shall mean either (i) the inability of the Executive to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or
(ii) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the Companies. The Executive shall be deemed disabled if he is determined to be (i) totally
disabled by the Social Security Administration (or a similar governmental agency in the country where the Executive is regularly assigned to work)
or (ii) disabled in accordance with a disability insurance program, provided such definition of disabled under the program complies with the
definition of Disability hereunder. Otherwise, such Disability shall be certified by a physician chosen by Nasdaq and reasonably acceptable to the
Executive (unless he is then legally incapacitated, in which case such physician shall be reasonably acceptable to the Executive’s authorized legal
representative).
(d)
(e)
(f)
“Employing Entity” shall mean Nasdaq or the affiliate that employs the Executive.
(g)
(h)
“Executive” shall mean an individual who is either a Non-CEO President, an Executive Vice President or Senior Vice President of the Companies;
provided, however that in no event shall an individual be eligible to participate in the Plan if the individual is covered under an active individual
severance agreement entered into with the Companies.
“Good Reason shall mean the Employing Entity (i) reducing the Executive’s position, duties, or authority; (ii) failing to secure the agreement of any
successor entity to the Company that the Executive shall continue in his or her position without reduction in position, duties or authority; or
(iii) relocating the Executive’s principal work location beyond a 50 mile radius of his or her work location as of the date immediately preceding the
date of a Change in Control; provided that no event or condition shall constitute Good Reason unless (A) the Executive gives the Employing Entity
written notice specifying his or her objection to such event or condition within 90 days following the occurrence of such event or condition, (B) such
event or condition is not corrected, in all material respects, by the Employing Entity in a manner that is reasonably satisfactory to the Executive
within 30 days following the Employing Entity’s receipt of such notice and (C) the Executive resigns from his or her employment with the
Employing Entity not more than 30 days following the expiration of the 30-day period described in the foregoing clause (B).
(i)
“Qualifying Termination” means a termination of Executive’s employment (i) by the Employing Entity other than for Cause or (ii) by Executive for
Good Reason. Termination of Executive’s employment on account of death, Disability or voluntary termination other than for Good Reason shall not
be treated as a Qualifying Termination.
3.
Payments Upon Termination of Employment following a Change in Control. If, within the period beginning on a Change in Control and ending two
(2) years following such Change in Control, Executive’s employment with the Employing Entity terminates by the Employing Entity for a reason other than
for Cause, or within the period beginning on a Change in Control and ending one (1) year following such Change in Control, Executive’s employment with
the Employing Entity terminates by the Executive for Good Reason, Executive shall be entitled to the following payments and benefits subject to
Section 3(e).
(a)
Severance. On the sixtieth (60 ) day following the date of Executive’s Qualifying Termination, Nasdaq shall pay Executive a lump sum cash
payment in accordance with the following schedule:
th
(i)
(ii)
if Executive is a non-CEO President or an Executive Vice President (“EVP”) as of the Executive’s Qualifying Termination, then Executive’s
lump sum cash payment shall be equal to the sum of (x) 200% of Executive’s annual salary at the rate in effect on the date of Executive’s
Qualifying Termination and (y) 100% of Executive’s “Individual Target Award” (as that term is defined in the Nasdaq Inc. Executive
Corporate Incentive Plan (the “Executive Incentive Plan”)) for the Plan Year (as that term is defined in the Incentive Plan) in which
Executive’s Qualifying Termination occurs, or if such Individual Target Award has not yet been established for such Plan Year, 100% of
Executive’s Individual Target Award for the Plan Year prior to the year in which the Qualifying Termination occurs.
if Executive is a Senior Vice President (“SVP”) as of the Executive’s Qualifying Termination, then the Executive’s lump sum cash payment
shall be equal to the sum of (x) 150% of Executive’s annual salary at the rate in effect on the date of Executive’s Qualifying Termination and
(y) 100% of Executive’s “Individual Target Award” (as that term is defined in The Nasdaq Inc. Corporate Incentive Plan (the “Corporate
Incentive Plan”)) for the Plan Year (as that term is defined in the Corporate Incentive Plan) in which Executive’s Qualifying Termination
occurs, or if such Individual Target Award has not yet been established for such Plan Year, 100% of Executive’s Individual Target Award for
the Plan Year prior to the year in which the Qualifying Termination occurs.
(b)
(c)
(d)
(e)
Incentive Compensation. Notwithstanding any provision of the Incentive Plan to the contrary, Nasdaq shall pay Executive on the sixtieth (60 ) day
following the date of Executive’s Qualifying Termination a lump sum cash payment equal to the sum of (i) any unpaid “Award” (as that term is
defined in the Executive Incentive Plan or Corporate Incentive Plan, as applicable) which had been earned by Executive for a completed Plan Year
and (ii) Executive’s “Pro-Rata Individual Target Award.” The term Pro-Rata Individual Target Award means in respect to the Plan Year during which
Executive’s Qualifying Termination occurs an amount equal to the product of (i) Executive’s Individual Target Award for the Plan Year in which
Executive’s Qualifying Termination occurs, or if such Individual Target Award has not yet been established for such Plan Year, 100% of Executive’s
Individual Target Award for the Plan Year prior to the year in which the Qualifying Termination occurs and (ii) a fraction, the numerator of which
equals the number of days from and including the first day of the Plan Year during which the Qualifying Termination occurred through and including
the date of Executive’s Qualifying Termination.
th
United States Health and Welfare Benefits. Nasdaq shall pay to Executive on a monthly basis during the CIC Coverage Period a taxable monthly cash
payment equal to the COBRA premium for the highest level of coverage available under the Employing Entity’s group health plans, but reduced by
the monthly amount that Executive would pay for such coverage if the Executive was an active employee. “CIC Coverage Period” shall mean the
period (I) commencing on the first day of the month following the Release and Covenants Effective Date (provided that if the 60 day period
described in Section 3(e) below begins in one calendar year and ends in another, the CIC Coverage Period shall commence not earlier than January 1
of the calendar year following an Executive’s Qualifying Termination) and (II) ending on the earlier of (x) the expiration of 24 months from the first
day of the CIC Coverage Period in the case of an Executive who is a non-CEO President or an EVP as of the Executive’s Qualifying Termination (the
expiration of 18 months in the case of an Executive who is a SVP as of the Executive’s Qualifying Termination), and (y) the date that the Executive is
eligible for coverage under the health care plans of a subsequent employer. The payments provided by this subparagraph (c) shall be conditioned
upon the Executive being covered by the Company’s health care plans immediately prior to the Executive’s Qualifying Termination. The foregoing
payments are not intended to limit or otherwise reduce any entitlements that Executive may have under COBRA.
Non-United States Health and Welfare Benefits. Executives employed outside the United States shall receive a taxable monthly cash payment
equivalent to the Employing Entity’s share of the cost of the highest level of coverage available under the Employing Entity’s group health
plans during the CIC Coverage Period unless otherwise required by applicable local law.
Outplacement Services. Nasdaq shall provide Executive with outplacement services suitable to Executive’s position during the “Outplacement
Coverage Period”; provided that if such outplacement services are provided by a third party, Nasdaq shall pay the cost of such outplacement services
to the third party, up to a maximum amount of $50,000, no later than the last day of the third calendar year following the calendar year in which such
Qualifying Termination occurs. The “Outplacement Coverage Period” shall mean the period (I) commencing on the first day of the month following
the Release and Covenants Effective Date (provided that if the 60 day period described in Section 3(e) below begins in one calendar year and ends in
another, the CIC Coverage Period shall commence not earlier than January 1 of the calendar year following an Executive’s Qualifying Termination)
and (II) ending on the earlier of (x) the expiration of 12 months from the first day of the Outplacement Coverage Period or, if earlier, (y) the date the
Executive first accepts an offer of employment.
(f)
Release and Restrictive Covenants. Notwithstanding anything to the contrary in this Agreement, receipt of benefits under Section 3 shall be
contingent upon (i) Executive executing and delivering to Nasdaq a general release of claims following the date of the Executive’s Qualifying
Termination, in substantially the form attached as Exhibit A (“Release”) that, within 60 days of the Executive’s Qualifying Termination, has become
irrevocable by the Executive and (ii) Executive executing and delivering to Nasdaq a restrictive covenants and cooperation agreement, in
substantially the form attached as Exhibit B (“Covenants”) that, within 60 days of the Executive’s Qualifying Termination, has become irrevocable
by the Executive. The date on which the Release and Covenants become irrevocable under this subparagraph (i) shall be referred to as the Release
and Covenants Effective Date. If Executive fails to timely execute and deliver to Nasdaq the Release and Covenants, Nasdaq shall have no obligation
to pay or provide the benefits provided under this Section 3 to the Executive. Executives employed outside of the United States will be required to
execute comparable agreements consistent with the requirements of local law.
4.
Special Provisions for Executives Employed Outside of the United States: The severance payment under this Plan includes all contractual and statutory
payments that the Executive is entitled to upon termination or during or in respect of his/her notice period, including but not limited to:
i.
ii.
salary, pension, bonus, etc., payable in a notice period or in lieu of notice,
all severance payments payable under statute or collective or other agreements, and
iii.
compensation for untaken holiday.
Any part of the severance payment payable under this Plan which - pursuant to law or collective or other agreement - is to be paid into a public holiday fund,
or pension scheme, etc., will be withheld by the Employing Entity and paid towards the relevant holiday fund or pension scheme, etc. The severance payment
will be treated as advance payment for any compensation or awards which may be made to the employee by any court or tribunal (although no admission of
liability in relation to any such compensation or award is made).
If the gross value of the Executive’s contractual and statutory rights pertaining to termination of employment exceeds the severance payment under this Plan,
the Executive will be entitled to receive his or her contractual and statutory rights (less any applicable deductions for income tax withholding and Executive’s
social taxes) instead of the severance payment under this Plan. In no event will the Executive be entitled to receive severance payments under this Plan in
addition to other statutory or contractual entitlements payable in connection with the termination of employment.
5. Withholding Taxes. Nasdaq may withhold from all payments or benefits due to Executive hereunder or under any other plan or arrangement of the
Companies all taxes which, by applicable federal, state, local or other law, Nasdaq determines it is required to withhold therefrom.
6.
Best Net. In connection with the excise tax imposed by Section 4999 of the Internal Revenue Code (“Code”), as amended, the Nasdaq will provide for the
“Best Net” so that Executive’s aggregate severance payments and benefits would be reduced to $1.00 less than that amount which would trigger the Code
Section 4999 excise tax if such reduction would result in such Executive receiving a greater after-tax benefit than Executive would receive if the full
severance benefits were paid (i.e., the aggregate severance payments and benefits that Executive receives will be either the full amount of severance
payments and benefits or an amount of severance payments and benefits reduced to the extent necessary so that Executive incurs no excise tax, whichever
results in Executive receiving the greater amount, taking into account applicable federal, state and local income, employment and other applicable taxes, as
well as the excise tax).
7.
Code Section 409A. To the extent applicable, it is intended that the Plan comply with the provisions of Code Section 409A. The Plan will be administered
and interpreted in a manner consistent with this intent, and any provision that would cause the Plan to fail to satisfy Code Section 409A will have no force
and effect until amended to comply therewith (which amendment may be retroactive to the extent permitted by Code Section 409A). Notwithstanding
anything contained herein to the contrary, for all purposes of this Plan, Executive shall not be deemed to have had a termination of employment until
Executive has incurred a separation from service as defined in Treasury Regulation §1.409A-1(h) and, to the extent required to avoid accelerated taxation
and/or tax penalties under Code Section 409A, payment of the amounts payable under the Plan that would otherwise be payable during the six-month period
after the date of termination shall instead be paid on the first business day after the expiration of such six-month period, plus interest thereon, at a rate equal
to the applicable “Federal short-term rate” (as defined in Code Section 1274(d)) for the month in which such date of termination occurs, from the respective
dates on which such amounts would otherwise have been paid until the actual date of payment. In addition, for purposes of the Plan, each amount to be paid
and each installment payment shall be construed as a separate, identified payment for purposes of Code Section 409A. With respect to expenses eligible for
reimbursement under the terms of this Plan, (i) the amount of such expenses eligible for reimbursement in any taxable year shall not affect the expenses
eligible for reimbursement in another taxable year and (ii) any reimbursements of such expenses shall be made no later than the end of the calendar year
following the calendar year in which the related expenses were incurred, except, in each case, to the extent that the right to reimbursement does not provide
for a “deferral of compensation” within the meaning of Code Section 409A.
8. Waiver of Breach. No waiver by any party hereto of a breach of any provision of the Plan by any other party, or of compliance with any condition or
provision of the Plan to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party of any
similar or dissimilar provisions and conditions at the same or any prior or subsequent time. The failure of any party hereto to take any action by reason of
such breach will not deprive such parry of the right to take action at any time while such breach continues
9.
Amendment and Termination. The Board may amend or terminate the Plan at any time; provided, however that no amendment of the Plan which is
adopted on or after a Change in Control or during the 180-day period immediately preceding a Change in Control shall directly or indirectly adversely
affect any Executive’s rights and benefits under the Plan without the written consent of that Executive and further provided, that the upon and after a
Change in Control, the Plan may not be terminated prior to the second anniversary of the occurrence of such Change in Control.
10. Administration. The Committee shall be responsible for administering this Plan. The Committee may employ attorneys, consultants, accountants, agents
and other individuals, any of whom may be an employee of Nasdaq, and the Committee, Nasdaq, and its officers and directors shall be entitled to rely upon
the advice, opinions or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final
and binding upon Executives, the Companies, and all other interested individuals.
11.
Binding Agreement; Successors. In the event of any Change in Control, the provisions of this Plan shall be binding upon the surviving corporation, and
such surviving corporation shall be treated as Nasdaq hereunder. This Plan shall inure to the benefit of and be enforceable by Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive dies while any amounts would be payable to
Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this
Plan to such person or persons appointed in writing by Executive to receive such amounts or, if no person is so appointed, to Executive’s estate.
12. Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
13. Unfunded Plan. Executives shall have no right, title or interest whatsoever in or to any investments that the Companies may make to aid it in meeting its
obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any
kind, or a fiduciary relationship between the Companies and any Executive, beneficiary, legal representative or any other individual. To the extent that any
individual acquires a right to receive payments under this Plan, such right shall be no greater than the right of an unsecured general creditor of the
Companies. All payments to be made hereunder shall be paid from the general funds of Nasdaq, and no special or separate fund shall be established, and no
segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.
14. Governing Law and Miscellaneous. The law of the State of New York shall govern this Plan without giving effect to its conflict of law principles. Should
a court of competent jurisdiction find that any provision of this Plan is void, voidable, illegal, or unenforceable, no other provision shall be affected thereby
and the balance shall be interpreted in a manner that gives effect to the intent of the parties. The normal rules of construction hold that all ambiguities are
construed against the drafting party will not apply to the interpretation of this Plan.
UNITED STATES GENERAL EXECUTIVE RELEASE AND WAIVER
1
Exhibit A
Reference is made to The Nasdaq Change in Control Severance Plan for Non-CEO Presidents, Executive Vice Presidents and Senior Vice
Presidents (the “CIC Plan”) that has been established by The Nasdaq, Inc. (“Nasdaq”), effective as of November 26, 2013 (as amended December 6, 2022) and
under
which (“Executive”) is covered. Capitalized terms not defined herein shall have the meaning ascribed to such terms in the CIC Plan.
FOR GOOD AND VALUABLE CONSIDERATION, as set forth in the CIC Plan (which is incorporated herein by reference as if set forth
fully herein and made a part hereof), the receipt, sufficiency and adequacy of which is hereby acknowledged by Executive’s signature below, Executive agrees as
follows:
1.
Acknowledgment and Release. Executive hereby accepts the separation package provided under the CIC Plan and hereby releases, discharges, and agrees
to hold harmless the Companies, their predecessors, successors, their boards of directors and their members, employees, officers, parent, shareholders,
employee benefit plans and their Plan Administrators, trusts, trustees, heirs, successors, and assigns (hereinafter referred to in this Release collectively as
the “Releasees”), from all claims, liabilities, demands, and causes of action at law or equity, known or unknown, fixed or contingent, which Executive have,
may have, will have, or claim to have against the Releasees as a result of Executive’s employment and/or this separation and the conclusion of Executive’s
employment with the Releasees at any time up to and including the date of the execution of this General Executive Release and Waiver, excluding all claims
that arise out of an asserted breach of the CIC Plan. Executive’s agreement pursuant to this General Executive Release and Waiver is hereinafter referred to
as the “Release”. This includes, but is not limited to, claims arising under federal, state, or local laws prohibiting employment discrimination, including
Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended (including the Older Workers Benefit
Protection Act), the Employment Retirement Income Security Act of 1974, as amended, the Equal Pay Act, the Fair Labor Standards Act, as amended, the
District of Columbia Human Rights Act, as amended, the Maryland Human Relations Act, the New York Executive Law, as amended, the New York City
Administrative Code, as amended, the New York Labor Law, as amended, the District of Columbia Wage Payment and Wage Collection Law, as amended,
the Maryland Wage Payment and Collection Act, as amended, claims growing out of any legal restrictions on an employer’s right to terminate its employees
in any jurisdiction, such as claims for wrongful or constructive discharge, breach of any express or implied contract, and/or any claims on any basis
whatsoever regarding Executive’s status, pay, position, or title while employed by the Releasees. Excluded from this Release are claims which cannot be
lawfully waived, including the right to file an administrative charge of discrimination with federal or state agencies. Executive is, however, waiving all
rights to monetary recovery in connection with any such charge.
Executive specifically promise not to sue the Releasees in any forum for any of the above-mentioned claims, except that Executive may bring a lawsuit to
challenge the validity of this letter agreement under the Age Discrimination in Employment Act (“ADEA”). If Executive violates this covenant,
Executive will be required to pay the Releasees’ defense costs, including its reasonable fees; alternatively, at Nasdaq’s option, Nasdaq’s remaining
obligations to pay severance money and/or benefits under the CIC Plan shall cease, and Executive will be required to repay to Nasdaq upon demand all
but $100.00 (one hundred dollars) of the payments and other benefits Executive received under the CIC Plan. The above payment/repayment provisions
do not apply in the event Executive sues the Releasees under the ADEA.
2.
Governing Law. The law of the State of New York shall govern this Release without giving effect to its conflict of law principles. Should a court of
competent jurisdiction find that any provision of this Release is void, voidable, illegal, or unenforceable, no other provision shall be affected thereby and
the balance shall be interpreted in a manner that gives effect to the intent of the parties. The parties agree that the normal rule of construction that holds that
all ambiguities are construed against the drafting party will not apply to the interpretation of this Release.
1
Executives assigned outside the United States shall be required to execute a comparable version of this agreement consistent with local law of the jurisdiction where the Executive is assigned.
3.
Headings. We further acknowledge that the headings in this Release are for convenience only and have no bearing on the meaning of this Release.
4.
5.
6.
7.
Time to Consider. Executive acknowledges that Executive has been advised that Executive has twenty-one (21) days from the date of receipt of this
Release to consider all the provisions of the Release and do hereby knowingly and voluntarily waive said given twenty-one day period. YOU FURTHER
ACKNOWLEDGE THAT YOU HAVE READ THE RELEASE CAREFULLY, HAVE BEEN ADVISED BY NASDAQ TO, AND HAVE IN FACT,
CONSULTED AN ATTORNEY, AND FULLY UNDERSTAND THAT BY SIGNING BELOW YOU ARE GIVING UP CERTAIN RIGHTS WHICH
YOU MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST THE RELEASEES AS DESCRIBED HEREIN. YOU ACKNOWLEDGE THAT YOU
HAVE NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS RELEASE AND AGREE TO ALL OF ITS
TERMS VOLUNTARILY.
Revocation. Executive shall have seven (7) days from the date of Executive’s execution of the Release to revoke the Release, with respect to all claims
referred to herein (including, without limitation, any and all claims arising under ADEA). If Executive revokes the Release, Nasdaq will not be obligated to
honor its obligations under the CIC Plan.
No Admission. This Release does not constitute an admission of liability or wrongdoing of any kind by Executive or the Releasees.
Coordination with Executive Restrictive Covenants and Cooperation Agreement. In addition to the timely submission to Nasdaq of an executed
Release, Executive acknowledges and agrees that the payment of any benefits under the CIC Plan to the Executive also is contingent upon the Executive’s
timely submission to Nasdaq of an executed Executive Restrictive Covenants and Cooperation Agreement in substantially the form attached as Exhibit B to
the CIC Plan. Executive acknowledges that the Executive’s failure to submit to Nasdaq on a timely basis an executed Executive Restrictive Covenants and
Cooperation Agreement shall Waiver shall cause the Companies’ obligation to make the payments and/or provide the benefits referred to in the CIC Plan to
immediately cease.
If Executive agrees to the foregoing, please sign the enclosed copy of this Release in the space provided below and return it to me.
Very truly yours,
Nasdaq, Inc.
By:
By signing below, I, , certify that I have read, carefully reviewed, fully understand, and agree to all the provisions of this Release, which, along with
the CIC Plan, Restrictive Covenants Agreement and any award agreements I entered into under the Equity Plan sets forth the entire agreement and understanding
between Nasdaq and me. I acknowledge that I have not relied upon any representation or statement, written or oral, not set forth in such documents.
Date:
cc: People @ Nasdaq
Office of General Counsel
UNITED STATES EXECUTIVE RESTRICTIVE COVENANTS AND COOPERATION AGREEMENT
2
Exhibit B
Reference is made to The Nasdaq Change in Control Severance Plan for Executive Vice Presidents and Senior Vice Presidents (the “CIC
Plan”) that has been established by Nasdaq, Inc.(“Nasdaq”), effective as of November 26, 2013 and under which (“Executive”) is covered.
Capitalized terms not defined herein shall have the meaning ascribed to such terms in the CIC Plan.
FOR GOOD AND VALUABLE CONSIDERATION, as set forth in the CIC Plan (which is incorporated herein by reference as if set forth
fully herein and made a part hereof), the receipt, sufficiency and adequacy of which is hereby acknowledged by Executive’s signature below, Executive agrees as
follows:
1.
2.
3.
4.
5.
Acknowledgment and Agreement. Executive hereby accepts the separation package provided under the CIC Plan and hereby agrees to the
provisions set forth in this Executive Restrictive Covenants and Cooperation Agreement (“Agreement”). Executive acknowledges that failure to
submit to Nasdaq and executed Agreement during the time period specified in Section 7 of this Agreement shall cause the Companies’ obligation to
make the payments and/or provide the benefits referred to in the CIC Plan to immediately cease.
Return of Nasdaq Property. Executive agrees to promptly return all property of the Companies to Executive’s manager. This includes (i) all
documents, data, materials, details, and copies thereof in any form (electronic or hard copy) that are the property of the Companies or were created
using the Companies resources or during any hours worked for the Companies including, without limitation, any data referred to in Section 5 of this
Agreement and (ii) all other property of the Companies including, without limitation, all computer equipment, and associated passwords, property
passes, keys, hardware keys, credit cards, and identification badges.
Non-solicitation of Employees. Executive agrees that Executive shall not directly recruit or solicit any current employee of the Companies to leave
the employ of the Companies for one year following the date of Executive’s Qualifying Termination. The term “directly” as used in this Section 3
shall mean that Executive shall not initiate such discussions with a current employee of the Companies.
Post-termination Cooperation. Executive agrees to cooperate with the Companies and to provide all information that the Companies may hereafter
reasonably request with respect to any matter involving Executive’s present or former relationship with the Companies, the work Executive has
performed, or present or former employees of the Companies so long as such requests do not unreasonably interfere with any other job or important
personal activity in which Executive is engaged. Nasdaq agrees to reimburse Executive for all reasonable out-of-pocket costs Executive incurs in
connection therewith.
Non-disclosure of Proprietary Information. Executive agrees that, with regard to all confidential technical, business, tax, financial or proprietary
knowledge and information Executive has obtained while employed by any of the Companies (“Proprietary Information”), Executive will not at any
time disclose any such Proprietary Information to any person, firm, corporation, association, governmental agency, employee, or entity or use any
such Proprietary Information for Executive’s own benefit or for the benefit of any other person, firm, corporation or other entity, except the
Companies and except as may be required by court order or subpoena. Executive agrees to notify the Nasdaq Office of General Counsel at the
address noted in the CIC Plan as soon as practicable after Executive’s receipt of such a court order or subpoena. For purposes of this letter
Executives assigned outside the United States shall be required to execute a comparable version of this agreement consistent with local law of the jurisdiction where the Executive is assigned.
2
agreement, the term “Proprietary Information” does not include information that is in the public domain. For purposes of this letter agreement, the
term “Proprietary Information” shall include, but not be limited to, non-public aspects of all information about or relating to the Companies which:
i.
relates to specific matters such as trade secrets, pricing and advertising techniques or strategies, research and development activities, software
development, market development, exchange registration, the Companies’ costs, expenses, human resources or other employment issues,
matters relating to pending litigation, any matters pertaining to pending, past or future mergers, studies, market penetration plans, listing
retention plans and strategies, marketing plans and strategies, financial information, communication and/or public relations products, plans,
programs, and strategies, financial formulas and methods relating to the Companies’ business, computer software programs, accounting
policies and practices, tax information, information from and about tax returns, tax strategies, policies and methods, and all strategic plans or
other matters, strategies, and financial or operating information pertaining to clients, lenders, customers, counsel, or transactions as they may
exist from time to time which Executive may have acquired or obtained directly or indirectly by virtue of Executive’s employment with any
of the Companies; and/or,
ii.
is known to Executive from Executive’s confidential employment relationship with the Companies.
6.
7.
The information described above shall be presumed to constitute “Proprietary Information,” except to the extent that the same information:
(i) was known to Executive prior to Executive’s employment with the Companies as evidenced by written records in Executive’s possession
prior to such disclosure; (ii) was lawfully disclosed to Executive following the end of Executive’s employment with the Companies by a third
party under no obligation of confidentiality; and (iii) is generally known and available to all persons in the securities industry.
Non-disparagement. Executive agrees that Executive shall not issue, circulate, publish or utter any false or disparaging, statement, remarks,
opinions or rumors about Nasdaq or its shareholders or any of the Companies unless giving truthful testimony under subpoena or court order.
Notwithstanding the preceding or any other provision of this letter agreement to the contrary, Executive may provide truthful information to any
governmental agency or self-regulatory organization with or without subpoena or court order. With the exception of communications made in a
private corporate communication as an employee or consultant with regard to a listing decision of Executive’s employer or Executive’s consulting
client, Executive agree that public communications regarding a preference for listing a security on a market other than Nasdaq, that the quality of
Nasdaq as a securities market is in any way inferior to any other securities market or exchange, and/or that the regulatory efforts and programs of
Nasdaq or the NASD are or have been lax in any way, are specifically defined as disparaging and will constitute a material breach of this Plan by
Executive. Notwithstanding the foregoing, nothing in this Section 5 shall prevent Executive from making good faith, factual and truthful statements
related to listing on Nasdaq as long as Executive’s statements are not based on Proprietary Information.
Non-compete. Executive agrees that for one year following the date of Executive’s Qualifying Termination, Executive will not, directly or indirectly,
(i) engage in any “Competitive Business” (as defined below) for Executive’s own account, (ii) enter the employ of, or render any services to, any
person engaged in a Competitive Business, (iii) acquire a financial interest in, or otherwise become actively involved with, any person engaged in a
Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant, or
(iv) interfere with business relationships (whether formed before or after the date of this Agreement) between Nasdaq and customers or suppliers of
Nasdaq. For purposes of this Agreement, “Competitive Business” shall mean (x) any national securities exchange registered with the Securities and
Exchange Commission, (y) any electronic communications network or (z) any other entity that engages in substantially the same business as Nasdaq,
in each case in North America or in any other location in which Nasdaq operates.
8.
Breach of Agreement. If Executive materially breaches or threatens to materially breach Executive’s obligations in set forth in this Agreement
and/or commence a suit or action or complaint in contravention of the Release attached as Exhibit A to the CIC Plan, Executive acknowledges that
the Companies’ obligation to make the payments and/or provide the benefits referred to in the CIC Plan shall immediately cease, and that the
Companies shall have, in addition to all other rights or remedies provided in law or in equity by reason of Executive’s material breach, the right to
seek the return of all payments and benefits paid pursuant to the CIC Plan unless prohibited by applicable law or regulation. Executive specifically
agrees and acknowledges that the Companies, after affording Executive reasonable, written notice of the material breach or threatened material
breach of this Agreement or the Release of the reasonable opportunity to cure, has the right to cease performing their obligations under the CIC Plan
in advance of any determination of material breach by a court of competent jurisdiction. If the Companies cease performing their obligations due to
such material breach or threatened material breach and a court of competent jurisdiction later determines that such action was without right, the
Companies agree to pay Executive all monies thus withheld plus simple interest at the prime rate in effect at the time the payments ceased and
Executive’s reasonable costs and expenses incurred in such action (including attorney fees), and Executive agrees to accept this as Executive’s
exclusive remedy therefore, as follows: any benefit under Sections 3(a) and 3(b) of the CIC Plan, as applicable, that are otherwise to be paid in a
single lump sum payment, shall, to the extent not otherwise previously paid to Executive, be paid to Executive in full (together with applicable
interest) no later than the end of Executive’s first taxable year in which such determination is made. Any reimbursement to Executive of the
reasonable costs and expenses incurred in such action shall be made no later than March 15 following the end of the calendar year in which the final
decision relating to such action is rendered. If the Companies cease performing their obligations due to such material breach or threatened material
breach and a court of competent jurisdiction later determines that a breach occurred and that such action was thus appropriate and permitted under
this Plan, Executive agrees to pay, in addition to such other costs as the court may direct, all of the Companies’ reasonable costs and expenses,
including attorney’s fees, unless prohibited by applicable law or regulation.
9.
Time to Consider and Execute. Executive acknowledges that Executive has been advised that Executive has twenty-eight (28) days from the date of
receipt of this Agreement (“Executive Period”) to consider all the provisions of the Agreement and to execute this Agreement and return it to
Nasdaq.
10. Coordination with General Executive Release and Waiver. In addition to the timely submission to Nasdaq of an executed Agreement, Executive
acknowledges and agrees that the payment of any benefits under the CIC Plan to the Executive also is contingent upon the Executive’s timely
submission to Nasdaq of an executed General Executive Release and Waiver in substantially the form attached as Exhibit A to the CIC Plan.
Executive acknowledges that the Executive’s failure to submit to Nasdaq on a timely basis an executed General Executive Release and Waiver shall
cause the Companies’ obligation to make the payments and/or provide the benefits referred to in the CIC Plan to immediately cease.
If Executive agrees to the foregoing, please sign the enclosed copy of this AGREEMENT in the space provided below and return it to me.
Very truly yours,
Nasdaq, Inc.
By:
By signing below, I, , certify that I have read, carefully reviewed, fully understand, and agree to all the provisions of this AGREEMENT, which, along
with the CIC Plan, General Executive Release and Waiver, and any award agreements I entered into under the Equity Plan sets forth the entire agreement and
understanding between Nasdaq and me. I acknowledge that I have not relied upon any representation or statement, written or oral, not set forth in such documents.
Date:
cc: People @ Nasdaq
Office of General Counsel
VERAFIN HOLDINGS INC.
AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN
Section 1. Purpose
This Amended and Restated Verafin Holdings Inc. Management Incentive Plan (this “Plan”) is effective as of October 3, 2022,
and is designed to promote the long-term financial interests and growth of Verafin Solutions ULC, a corporation existing under the laws
of British Columbia (the “Company”), by motivating management personnel to achieve Company goals, and thereby furthering the
alignment of the interests of Plan participants with those of the Company.
Exhibit 10.24
Section 2. Definitions
As used in this Plan, the following words shall have the following meanings:
(a) “Acceleration Event” means, with respect to a Key Employee, the occurrence of any of the following (prior to a Forfeiture
Event with respect to such Key Employee): (i) such Key Employee’s resignation or termination of employment with the Company or
any of its Affiliates for Good Reason, (ii) termination of such Key Employee’s employment with the Company or any of its Affiliates
by the Company or its Affiliates other than for a Cause Event, or (iii) such Key Employee’s death or Permanent Disability; provided
that if the Key Employee’s employment terminates on or in connection with the occurrence of an Acceleration Event, then, subject to
applicable employment or labour standards legislation and compliance by the Company or any of its Affiliates, as applicable, with the
Key Employee’s termination and severance entitlements pursuant to the common law and/or the Key Employee’s contract of
employment with the Company or any of its Affiliates, as the case may be (in all cases, to the extent applicable), such Acceleration
Event shall be treated as an Acceleration Event for purposes hereof only if such Key Employee executes (and does not revoke) a
standard release of employment claims (including, without limitation, claims under applicable employment or labour standards
legislation, human rights legislation, and occupational health and safety legislation) in a form reasonably satisfactory to the Company.
(b) “Affiliate” shall have the meaning ascribed thereto in Rule 12b-2 promulgated under the U.S. Securities Exchange Act of
1934, as amended, as in effect on the date hereof.
(c) “Award” means an award granted hereunder that entitles the Key Employee to a payment and award opportunity
hereunder, subject to the terms and conditions of this Plan and the applicable Award Agreement.
(d) “Award Agreement” means any written or electronic agreement, contract or other instrument or document evidencing any
Award, which may (but need not) require execution or acknowledgment by the applicable Key Employee.
(e) “Board” means the Board of Directors of the Company.
(f) “Business Day” means any day on which banks are required to be open to conduct business in New York City, New York
and St. John’s, Newfoundland and Labrador.
(g) “Cause Event” means, for the purposes of a Key Employee’s rights and entitlements hereunder and not for any other
purpose or entitlement, the occurrence of any one or
1
more of the following events: (i) any commission by such Key Employee of a criminal act, felony or other indictable offence involving
fraud, theft or embezzlement, (ii) any commission by such Key Employee of dishonesty, misrepresentation, conflict of interest or
breach of trust, or (iii) any other act(s) or omission(s) by the Key Employee constituting just cause for termination at common law;
provided that (x) the occurrence of any event under clause (ii) or (iii) is not cured by the Key Employee within 60 days of receipt of
written notice from the Parent to the Key Employee and (y) if a Key Employee is charged with a criminal act, felony or other indictable
offence involving fraud, theft or embezzlement, the amount, if any, that would have become payable hereunder to such Key Employee
shall be set aside and held pending the outcome of such charge, and if the Key Employee is acquitted or the charge dropped then clause
(i) shall not apply with respect to such criminal act, felony or other indictable offence involving fraud, theft or embezzlement.
(h) “Founder” means each of Jamie King, Raymond Pretty and Brendan Brothers.
(i) “Founder Majority” means a majority of the Founders that are employed by the Company or one of its Affiliates as of the
applicable time.
(j) “Forfeiture Event” means, with respect to a Key Employee, (i) a resignation or termination of such Key Employee’s
employment with the Company or any of its Affiliates without Good Reason (other than a resignation or termination that occurs
subsequent to an Acceleration Event), (ii) the termination of such Key Employee’s employment with the Company or any of its
Affiliates by the Company or its Affiliates for a Cause Event or (iii) a material breach by such Key Employee of such Key Employee’s
obligations under Article VI of the Escrow and Management Incentive Agreement, by and among Parent, Osprey Acquisition
Corporation, the Company and various individual Company employees, dated as of November 18, 2020, as amended, modified or
supplemented from time to time (the “EMIA”), in each case during the Performance Period.
(k) “Good Reason” means, with respect to any Key Employee, any act(s) or omission(s) constituting or resulting in (x) a
constructive dismissal at common law, (y) a material adverse change to the Key Employee’s role or responsibilities, or (z) a material
breach by the Company of the Key Employee’s contract of employment with the Company or any of its Affiliates, as the case may be;
provided that no act or omission shall constitute Good Reason unless (i) the Key Employee gives written notice specifying the objection
to such act or omission within 90 days following the occurrence of such act or omission, (ii) such act or omission is not corrected, in all
material respects, in a manner that is reasonably satisfactory to the Key Employee within 30 days following the receipt of such notice,
and (iii) the Key Employee resigns from the Key Employee’s employment within not more than 30 days following the expiration of the
thirty (30)-day period described in the foregoing clause (ii).
(l) “MIP Amount” means, with respect to a Key Employee, an amount determined in accordance with the formula set forth on
Annex A. Subject to Section 5, the MIP Amount of a Key Employee shall be determined as soon as reasonably practicable following
the conclusion of the Performance Period.
(m) “Parent” means Nasdaq, Inc., a Delaware corporation.
(n) “Parent Equity Plan” means the Nasdaq, Inc. Equity Incentive Plan (as amended and restated April 24, 2018), or any
successor thereto.
(o) “Parent Price” means the Fair Market Value (as defined in the Parent Equity Plan) of one Parent Share as of the date of
grant or transfer of the applicable Parent Share.
2
(p) “Parent Shares” means Shares (as defined in the Parent Equity Plan).
(q) “Party” means each of Parent, the Company and each of the Key Employees.
(r) “Performance Period” means the period commencing on February 11, 2021 and concluding on December 31, 2023.
(s) “Permanent Disability” means a physical or mental incapacity of the Key Employee that has prevented the Key Employee
from performing the duties customarily assigned to the Key Employee for twelve consecutive months and that qualifies the Key
Employee for long-term disability benefits under the applicable disability plan of the Company and its Affiliates (or if there is no such
plan in effect at the time, then would have qualified such Key Employee under such plan in effect as of the date hereof).
(t) “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political
subdivision thereof.
(u) “Restricted Stock Terms” shall include a vesting period of one year from the date of the end of the Performance Period and
the standard terms and conditions that apply to restricted stock awards pursuant to the Parent Equity Plan, provided, however, that in
the event of i) a resignation or termination of a Key Employee’s employment with the Company or any of its Affiliates with Good
Reason, or (ii) the termination of a Key Employee’s employment with the Company or any of its Affiliates by the Company or its
Affiliates other than for a Cause Event, the vesting of any stock award granted under this Amended and Restated Management
Incentive Plan shall be fully accelerated for that Key Employee.
(v) “Subsidiary” means, with respect to any Person, any corporation of which a majority of the total voting power of shares
entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a
combination thereof, or any partnership, association or other business entity of which a majority of the partnership or other similar
ownership interest is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person
or a combination thereof. For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership,
association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, association or other
business entity or is or controls the managing director or general partner of such partnership, association or other business entity.
Section 3. Administration
This Plan shall be administered by the Board, in good faith. The Board shall have full power and authority to administer and
interpret this Plan and Awards granted hereunder, including, without limitation, the power to (i) exercise all of the powers granted to it
hereunder, (ii) construe, interpret and implement this Plan and any Award Agreement, (iii) prescribe, amend and rescind rules and
regulations relating to this Plan, including rules governing its own operations, (iv) make all determinations necessary or advisable in
administering this Plan and any Awards and Award Agreements, (v) correct any defect, supply any omission and reconcile any
inconsistency in this Plan and any Awards or Award Agreements, (vi) delegate such powers and authority to such persons as it deems
appropriate; provided that any such delegation is consistent with applicable law and any guidelines as may be established by the Board
from time to time, and (vii) waive any forfeiture, vesting or other conditions under any Awards. Subject to
3
Section 9, the determination of the Board on all matters relating to this Plan, any Award Agreement or any Awards in good faith shall
be final, binding and conclusive upon all Persons. Without limiting the generality of the foregoing, the Board may adjust the terms of
Annex A in respect of changes to the equity structure of the Company or in the event of other material corporate transactions or
restructuring events, to the extent that the Board in its good faith discretion determines necessary or appropriate to preserve the
intended economic intent of the terms of Annex A, provided, however, that any such adjustment shall be made in consultation with the
Founder Majority.
Section 4. MIP Amount
No later than April 1, 2024, each Key Employee shall receive (a) a lump sum cash payment equal to 50% of such Key
Employee’s MIP Amount, (b) unrestricted Parent Shares pursuant to the Parent Equity Plan, with the number of such shares equal to the
quotient of 25% of such Key Employee’s MIP Amount divided by the Parent Price, and (c) an award of restricted Parent Shares
pursuant to the Parent Equity Plan, with the number of such shares equal to the quotient of 25% of such Key Employee’s MIP Amount
divided by the Parent Price (which award shall be subject to the Restricted Stock Terms); provided that such Key Employee (i) is
employed by and providing services to the Company or one of its Affiliates as of the end of the Performance Period (such continued
services requirement, the “Continued Service Requirement”), provided that such Continued Service Requirement shall be deemed
satisfied if an Acceleration Event occurred during the Performance Period in respect of such Key Employee and (ii) has not experienced
a Forfeiture Event during the Performance Period.
Section 5. Forfeiture Event
Subject to the express minimum requirements of applicable employment or labour standards legislation, if any, if a Forfeiture
Event occurs during the Performance Period, the applicable Key Employee shall forfeit any entitlement under this Plan to any MIP
Amount.
Section 6. Amendment and Termination
This Plan may only be amended, modified or supplemented, and any provision of this Plan may only be waived, in writing by
the approval of each of Parent and the Founder Majority; provided, however, that notwithstanding anything to the contrary, any
amendment, modification or supplement of this Plan that on its face materially adversely affects the rights or obligations of any Party
differently than those of the other Parties (and in the case of a Key Employee, materially adversely relative to other Key Employees), as
applicable, shall also require the written approval of the differentially adversely affected Party.
Section 7. No Employment Rights
Nothing in this Plan shall confer upon any Key Employee the right to continue in the employ of the Company or its affiliates or
affect any right that the Company or its affiliates may have to terminate such employment.
Section 8. Tax Withholding
The Company may withhold from any amounts payable hereunder such taxes as the Company determines are required to be
withheld pursuant to applicable law.
Section 9. Dispute Resolution
4
Any controversy or dispute arising in respect of this Plan, including without limitation, its administration, application or any
issue with respect to any entitlement thereunder shall be resolved by arbitration in accordance with the procedures set forth in Section
7.4 of the EMIA.
Section 10. Governing Law
This Plan shall be construed in accordance with, and governed by, the laws of the State of Delaware without regard to conflicts
of laws principles which would result in the application of the laws of another jurisdiction.
5
VERAFIN HOLDINGS INC.
AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN
AWARD AGREEMENT
Exhibit 10.25
Dear Brendan Brothers,
This letter represents your Award Agreement under the Verafin Holdings Inc. Amended and Restated Management
Incentive Plan (the “MIP”). All capitalized terms used but not defined herein shall have the meanings ascribed to them in the MIP. Your
Target MIP Amount for purposes of the MIP is $6,259,750, subject to the terms and conditions of the MIP (including Section 3
thereof). By your signature below, you acknowledge your agreement to the terms of the MIP and this Award Agreement, and also re-
affirm your surviving obligations under the EMIA.
Thank you for your dedication to the Nasdaq and Verafin team.
Sincerely,
/s/ Jamie King
On behalf of Verafin Solutions ULC, successor to
Osprey Acquisition Corporation and Verafin
Holdings, Inc.
By: Jamie King
Title: Director
Acknowledged and Agreed:
/s/ Brendan Brothers
Brendan Brothers
Exhibit 10.26
VERAFIN HOLDINGS INC.
AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN
AWARD AGREEMENT
Dear Jamie King,
This letter represents your Award Agreement under the Verafin Holdings Inc. Amended and Restated Management
Incentive Plan (the “MIP”). All capitalized terms used but not defined herein shall have the meanings ascribed to them in the MIP. Your
Target MIP Amount for purposes of the MIP is $7,446,000, subject to the terms and conditions of the MIP (including Section 3
thereof). By your signature below, you acknowledge your agreement to the terms of the MIP and this Award Agreement, and also re-
affirm your surviving obligations under the EMIA.
Thank you for your dedication to the Nasdaq and Verafin team.
Sincerely,
/s/ Ann Dennison
On behalf of Verafin Solutions ULC, successor to
Osprey Acquisition Corporation and Verafin
Holdings, Inc.
By: Ann Dennison
Title: Director
Acknowledged and Agreed:
/s/ Jamie King
Jamie King
Subsidiaries of Nasdaq, Inc.*
As of February 15, 2023
Exhibit 21.1
U.S. Entities
1. BoardVantage, Inc (organized in Delaware)
2. Boston Stock Exchange Clearing Corporation (organized in Massachusetts)
3. Consolidated Securities Source LLC (organized in Delaware)
4. Content Services, LLC (organized in Delaware)
5. Curzon Street Acquisition, LLC (organized in Delaware)
6. Directors Desk, LLC (organized in Delaware)
7. Dorsey, Wright & Associates, LLC (organized in Virginia)
eVestment Alliance Holdings, Inc. (organized in Delaware)
8.
9.
eVestment Alliance Holdings, LLC (organized in Georgia)
10. eVestment Alliance, LLC (organized in Georgia)
11. eVestment, Inc. (organized in Delaware)
12. ExactEquity, LLC (organized in Delaware)
13. FinQloud LLC (organized in Delaware)
14. FINRA/Nasdaq Trade Reporting Facility LLC (organized in Delaware)
15. FRAMLxchange Inc. (organized in Delaware)
16. FTEN, Inc. (organized in Delaware)
17. Granite Redux, Inc. (organized in Delaware)
18. GraniteBlock, Inc. (organized in Delaware)
19. International Securities Exchange Holdings, Inc. (organized in Delaware)
20. ISE ETF Ventures LLC (organized in Delaware)
21. Longitude LLC (organized in Delaware)
22. Nasdaq BX, Inc. (organized in Delaware)
23. Nasdaq Capital Markets Advisory LLC (organized in Delaware)
24. Nasdaq Commodities Clearing LLC (organized in Delaware)
25. Nasdaq Corporate Services, LLC (organized in Delaware)
26. Nasdaq Corporate Solutions, LLC (organized in Delaware)
27. Nasdaq Digital Asset Holdings, LLC (organized in Delaware)
28. NASDAQ Energy Futures, LLC (organized in Delaware)
29. Nasdaq Execution Services, LLC (organized in Delaware)
30. Nasdaq Fund Secondaries, LLC (organized in Delaware)
31. NASDAQ Futures, Inc. (organized in Delaware)
32. Nasdaq GEMX, LLC (organized in Delaware)
33. NASDAQ Global, Inc. (organized in Delaware)
34. Nasdaq Governance Solutions, Inc. (organized in Delaware)
35. Nasdaq Information, LLC (organized in Delaware)
36. Nasdaq International Market Initiatives, Inc. (organized in Delaware)
37. Nasdaq ISE, LLC (organized in Delaware)
38. Nasdaq MRX, LLC (organized in Delaware)
39. Nasdaq PHLX LLC (organized in Delaware)
40. Nasdaq SB Holdings, LLC (organized in Delaware)
41. Nasdaq SPS, LLC (organized in Delaware)
42. Nasdaq Technology Services, LLC (organized in Delaware)
43. NFSTX, LLC (organized in Delaware)
44. Norway Acquisition LLC (organized in Delaware)
45. OneReport, Inc, (organized in Vermont)
46. Operations & Compliance Network, LLC (organized in Delaware)
47. Public Plan IQ Limited Liability Company (organized in New Jersey)
48. QDiligence LLC (organized in Illinois)
49. Solovis, Inc.
50. Stock Clearing Corporation of Philadelphia (organized in Pennsylvania)
51. Strategic Financial Solutions, LLC (organized in Nevada)
52. Sybenetix Inc. (organized in Delaware)
53. The Center for Board Evaluation, Inc. (organized in North Carolina)
54. The Nasdaq Options Market LLC (organized in Delaware)
55. The Nasdaq Stock Market LLC (organized in Delaware)
56. U.S. Exchange Holdings, Inc. (organized in Delaware)
57. Verafin AcquisitionCo LLC (organized in Delaware)
58. Verafin USA Inc. (organized in Delaware)
Non-U.S. Subsidiaries
eVestment Alliance (UK) Limited (organized in the United Kingdom)
eVestment Alliance Australia Pty Ltd (organized in Australia)
eVestment Alliance Hong Kong Limited (organized in Hong Kong)
1. AB Nasdaq Vilnius (organized in Lithuania) (96.35% owned, directly or indirectly, by Nasdaq, Inc.)
2. AS eCSD Expert (organized in Estonia)
3. AS Pensionikeskus AS (organized in Estonia)
4. Cinnober Financial Technology AB (organized in Sweden)
5. Curzon Street Holdings Limited (organized in the United Kingdom)
6. Ensoleillement Inc. (organized in Canada)
7.
8.
9.
10. Indxis Ltd (organized in the United Kingdom)
11. Metrio Software Inc. (organized in Quebec)
12. Nasdaq (Asia Pacific) Pte. Ltd. (organized in Singapore)
13. Nasdaq AB (organized in Sweden)
14. Nasdaq Australia Holding Pty Ltd (organized in Australia)
15. NASDAQ Canada Inc. (organized in Canada)
16. Nasdaq Clearing AB (organized in Sweden)
17. Nasdaq Copenhagen A/S (organized in Denmark)
18. Nasdaq Corporate Solutions (India) Private Limited (organized in India)
19. Nasdaq Corporate Solutions International Limited (organized in the United Kingdom)
20. Nasdaq CSD SE (organized in Latvia)
21. Nasdaq CXC Limited (organized in Canada)
22. Nasdaq Exchange and Clearing Services AB (organized in Sweden)
23. Nasdaq France SAS (organized in France)
24. Nasdaq Germany GmbH (organized in Germany)
25. Nasdaq Helsinki Ltd (organized in Finland)
26. Nasdaq Holding AB (organized in Sweden)
27. Nasdaq Holding Denmark A/S (organized in Denmark)
28. Nasdaq Holding Luxembourg Sárl (organized in Luxembourg)
29. Nasdaq Iceland hf. (organized in Iceland)
30. Nasdaq International Ltd (organized in the United Kingdom)
31. NASDAQ Korea Ltd (organized in South Korea)
32. Nasdaq Ltd (organized in Hong Kong)
33. Nasdaq Nordic Ltd (organized in Finland)
34. NASDAQ OMX Europe Ltd (organized in the United Kingdom)
35. Nasdaq Oslo ASA (organized in Norway)
36. Nasdaq Pty Ltd (organized in Australia)
37. Nasdaq Riga, AS (organized in Latvia) (92.98% owned, directly or indirectly, by Nasdaq, Inc.)
38. Nasdaq Spot AB (organized in Sweden)
39. Nasdaq Stockholm AB (organized in Sweden)
40. Nasdaq Tallinn AS (organized in Estonia)
41. Nasdaq Technology (Japan) Ltd (organized in Japan)
42. Nasdaq Technology AB (organized in Sweden)
43. Nasdaq Technology Energy Systems AS (organized in Norway)
44. Nasdaq Technology Italy Srl (organized in Italy)
45. Nasdaq Teknoloji Servisi Limited Sirketi (organized in Turkey)
46. Nasdaq Treasury AB (organized in Sweden)
47. Nasdaq Vilnius Services UAB (organized in Lithuania)
48. Nasdaq Wizer Solutions AB (organized in Sweden)
49. OMX Netherlands B.V. (organized in the Netherlands)
50. OMX Netherlands Holding B.V. (organized in the Netherlands)
51. OMX Treasury Euro AB (organized in Sweden) (99.9% owned, directly or indirectly, by Nasdaq, Inc.)
52. OMX Treasury Euro Holding AB (organized in Sweden)
53. Puro.earth (organized in Finland) (70% owned, directly or indirectly, by Nasdaq, Inc.)
54. Quandl, Inc. (organized in Canada, Federal)
55. RF Nordic Express AB (organized in Sweden) (50.1% owned, directly or indirectly, by Nasdaq, Inc.)
56. Shareholder.com B.V. (organized in the Netherlands)
57. Simplitium Ltd (organized in the United Kingdom)
58. SMARTS Broker Compliance Pty Ltd (organized in Australia)
59. SMARTS Market Surveillance Pty Ltd (organized in Australia)
60. Sybenetix Limited (organized in the United Kingdom)
61. Sybenetix Ukraine (organized in the Ukraine)
62. TopQ Software Limited (organized in the United Kingdom)
63. Verafin Solutions ULC (organized in Canada)
64. Whittaker & Garnier Limited (organized in the United Kingdom)
* The list of subsidiaries does not include not-for-profit entities or foreign branches of subsidiaries, or entities in which Nasdaq owns less than 50% of the entity.
Exhibit 23.1
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Registration Statement (Form S-3 No. 333-255666) of Nasdaq, Inc.,
Registration Statement (Form S-8 No. 333-239891) pertaining to Nasdaq, Inc. Employee Stock Purchase Plan,
Registration Statement (Form S-8 No. 333-225218) pertaining to Nasdaq, Inc. Equity Incentive Plan,
Registration Statement (Form S-8 No. 333-196838) pertaining to Nasdaq, Inc. (f/k/a The NASDAQ OMX Group, Inc.) Equity
Incentive Plan,
Registration Statement (Form S-8 No. 333-167724) pertaining to Nasdaq, Inc. (f/k/a The NASDAQ OMX Group, Inc.)
Employee Stock Purchase Plan,
Registration Statement (Form S-8 No. 333-167723) pertaining to Nasdaq, Inc. (f/k/a The NASDAQ OMX Group, Inc.) Equity
Incentive Plan,
Registration Statement (Form S-8 No. 333-110602) pertaining to The Nasdaq Stock Market, Inc. Equity Incentive Plan,
Registration Statement (Form S-8 No. 333-106945) pertaining to the Employment Agreement with Robert Greifeld of The
Nasdaq Stock Market, Inc.,
Registration Statement (Form S-8 No. 333-76064) pertaining to The Nasdaq Stock Market, Inc. 2000 Employee Stock Purchase
Plan,
(10) Registration Statement (Form S-8 No. 333-72852) pertaining to The Nasdaq Stock Market, Inc. 2000 Employee Stock Purchase
Plan,
(11) Registration Statement (Form S-8 No. 333-70992) pertaining to The Nasdaq Stock Market, Inc. Equity Incentive Plan, and
(12) Registration Statement (Form S-8 No. 333-265824) pertaining to The Nasdaq, Inc. Deferred Compensation Plan;
of our reports dated February 23, 2023, with respect to the consolidated financial statements of Nasdaq, Inc. and the effectiveness of
internal control over financial reporting of Nasdaq, Inc. included in this Annual Report (Form 10-K) of Nasdaq, Inc. for the year ended
December 31, 2022.
/s/ Ernst & Young LLP
New York, New York
February 23, 2023
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Exhibit 24.1
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for her and in her name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Melissa M. Arnoldi
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for her and in her name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Charlene T. Begley
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for him and in his name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Steven D. Black
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for him and in his name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Essa Kazim
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for him and in his name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Thomas A. Kloet
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for him and in his name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ John D. Rainey
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for him and in his name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Michael R. Splinter
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for him and in his name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Johan Torgeby
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for her and in her name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Toni Townes-Whitley
Signature
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
NASDAQ, INC.
Know all persons by these presents, that the undersigned, a director of Nasdaq, Inc., a Delaware corporation, hereby constitutes and
appoints John A. Zecca and Erika Moore, and each of them acting individually, the undersigned’s true and lawful attorneys-in-fact and
agents, each with full power and substitution and resubstitution, for him and in his name, place, and stead, in any case and all capacities
to:
(1) execute for and on behalf of the undersigned, an Annual Report on Form 10-K of Nasdaq, Inc. for the fiscal year ended December
31, 2022, including any and all amendments and additions thereto (collectively, the “Annual Report”) in accordance with the Securities
Exchange Act of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to file, or cause to be
filed, the Annual Report with all exhibits thereto (including this Power of Attorney), and other documents in connection therewith, with
the United States Securities and Exchange Commission; and
(3) take any other action or any type whatsoever in connection with the foregoing which, in the opinion of such attorneys-in-fact,
may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by
such attorneys-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorneys-in-fact may approve in such attorneys-in-fact’s discretion.
The undersigned hereby grants to each attorney-in-fact full power and authority to do and perform any and every act and thing
whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents
and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying
and confirming all that such shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein
granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of February 23, 2023.
/s/ Alfred W. Zollar
Signature
Exhibit 31.1
I, Adena T. Friedman, certify that:
1. I have reviewed this Annual Report on Form 10-K of Nasdaq, Inc.;
CERTIFICATION
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Name:
Title:
/s/ Adena T. Friedman
Adena T. Friedman
Chief Executive Officer
Date: February 23, 2023
CERTIFICATION
Exhibit 31.2
I, Ann M. Dennison, certify that:
1. I have reviewed this Annual Report on Form 10-K of Nasdaq, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Name:
Title:
/s/ Ann M. Dennison
Ann M. Dennison
Executive Vice President and Chief Financial Officer
Date: February 23, 2023
Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Nasdaq, Inc. (the “Company”) for the period ended December 31, 2022 as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), Adena T. Friedman, as Chief Executive Officer of the Company, and Ann M. Dennison, as Executive
Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-
Oxley Act of 2002, that, to the best of her knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the
Company.
Name:
Title:
Date:
Name:
Title:
Date:
/s/ Adena T. Friedman
Adena T. Friedman
Chief Executive Officer
February 23, 2023
/s/ Ann M. Dennison
Ann M. Dennison
Executive Vice President and Chief Financial Officer
February 23, 2023
This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley
Act of 2002, be deemed filed by the Company for purposes of § 18 of the Securities Exchange Act of 1934, as amended.