Edgar Filing: NASDAQ, INC.

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2017
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________

Commission file number: 000-32651

___________________________________

Nasdaq, Inc.

(Exact name of registrant as specified in its charter)



Delaware (State or Other Jurisdiction of Incorporation or Organization)	52-1165937 (I.R.S. Employer Identification No.)

One Liberty Plaza, New York, New York (Address of Principal Executive Offices)	10006 (Zip Code)

Registrant’s telephone number, including area code:

+1 212 401 8700

No changes

(Former name, former address and former fiscal year, if changed since last report)

_______________________________

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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	☒	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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



Class		Outstanding at July 27, 2017
Common Stock, $.01 par value per share		166,796,254 shares

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Nasdaq, Inc.

Form 10-Q

For the Quarterly Period Ended June 30, 2017

INDEX




Part I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (unaudited)	2

	Condensed Consolidated Balance Sheets - June 30, 2017 and December 31, 2016	2

	Condensed Consolidated Statements of Income - Three and Six Months Ended June 30, 2017 and 2016	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Six Months Ended June 30, 2017 and 2016	4

	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2017 and 2016	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	54

Part II. OTHER INFORMATION		55

Item 1.	Legal Proceedings	55

Item 1A.	Risk Factors	55

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3.	Defaults Upon Senior Securities	55

Item 4.	Mine Safety Disclosures	55

Item 5.	Other Information	55

Item 6.	Exhibits	55

SIGNATURES		56

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About This Form 10-Q

Throughout this Form 10-Q, unless otherwise specified:


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


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


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


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


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


•	“Nasdaq ISE” refers to the options exchange operated by International Securities Exchange, LLC.


•	“Nasdaq Nordic” refers to collectively, Nasdaq Clearing AB, Nasdaq Stockholm AB, Nasdaq Copenhagen A/S, Nasdaq Helsinki Ltd, and Nasdaq Iceland hf.


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


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

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


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

* * * * * *

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

401(k) Plan: Voluntary Defined Contribution Savings Plan

2016 Credit Facility: $400 million senior unsecured term loan facility which matures on November 25, 2019

2017 Credit Facility: $1 billion senior unsecured term loan facility which matures on April 25, 2022

2020 Notes: $600 million aggregate principal amount of 5.55% senior unsecured notes due January 15, 2020

2021 Notes: €600 million aggregate principal amount of 3.875% senior unsecured notes due June 7, 2021

2023 Notes: €600 million aggregate principal amount of 1.75% senior unsecured notes due May 19, 2023

2024 Notes: $500 million aggregate principal amount of 4.25% senior unsecured notes due June 1, 2024

2026 Notes: $500 million aggregate principal amount of 3.85% senior unsecured notes due June 30, 2026

ASU: Accounting Standards Update

CCP: Central Counterparty

EMIR: European Market Infrastructure Regulation

Equity Plan: Nasdaq Equity Incentive Plan

ESPP: Nasdaq Employee Stock Purchase Plan

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

FINRA: Financial Industry Regulatory Authority

IPO: Initial Public Offering

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

LIBOR: London Interbank Offered Rate

MTF: Multilateral Trading Facility

NFX: Nasdaq Futures, Inc.

NPM: The Nasdaq Private Market, LLC

NSCC: National Securities Clearing Corporation

OCC: The Options Clearing Corporation

OTC: Over-the-Counter

PSU: Performance Share Unit

SEC: U.S. Securities and Exchange Commission

SERP: Supplemental Executive Retirement Plan

SFSA: Swedish Financial Supervisory Authority

SMARTS: SMARTS Group Holdings Pty

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S&P: Standard & Poor’s

S&P 500: S&P 500 Stock Index

TSR: Total Shareholder Return

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

* * * * * *

The following is a non-exclusive list of registered trademarks, registered service marks, or trademarks or service marks of Nasdaq or its subsidiaries, in the United States and/or other countries or jurisdictions:

@TRADE®, ACES®, AT TRADE®, AT-TRADE®, AGGREGATION, TRANSPARENCY, CONTROL®, AUTO WORKUP®, AXE®, BOARDVANTAGE, BWISE®, BWISE BUSINESS IN CONTROL®, BWISE RAPID DEPLOYMENT SOLUTION®, BX VENTURE MARKET®, CANADIAN DIVIDEND ACHIEVERS®, CCBN®, CCN®, CCN NEWSNET DESIGN, CCNMATTHEWS®, CLICK XT®, CONDICO®, CYBER SECURITY®, D.A.L.I®, DEFENSE OF INTERNATIONAL MARKETS AND EXCHANGES SYMPOSIUM®, DIMES®, DIRECTORS DESK®, DIRECTORSDESK®, DIVIDEND ACHIEVERS®, DORSEY WRIGHT®, DREAM IT. DO IT.®, DWA®, DWA MATRIX®, EQQQ, E (design), E-SPEED®, ESPEED®, ESPEEDOMETER®, EXACTEQUITY®, EXIGO, FINQLOUD®, FINQLOUD REGULATORY RECORDS RETENTION® FIRST NORTH®, FONDSBØRSEN®, FTEN®, GENIUM®, GIDS®, GLOBE NEWSWIRE®, GO! POWERED BY MARKETWIRE®, HACK®, IGNITE YOUR AMBITION®, INET®, INTERNATIONAL SECURITIES EXCHANGE®, INVESTOR WORLD®, IPOWORLD®, ISE, ISE BIG DATA®, ISE BLACK SWAN®, ISE FX OPTIONS®, ISE GEMINI®, ISE MOBILE PAYMENTS®, ISEE SELECT®, ISSUERWORLD®, ITCH®, KFXAKTIEINDEX®, LONGITUDE®, MARKET INTELLIGENCE DESK®, MARKET LINQUIDITY, MARKET MECHANICS®, MARKETSITE®, MARKETWIRE®, MARKETWIRE BEYOND WORDS®, MARKETWIRE RESONATE®, MARKETWIRE GO! ®, MARKETWIRED RESONATE®, MARKETWIRED®, MW®, MW MARKET WIRED®, MW MARKETWIRED THE POWER OF INFLUENCE®, MY CCBN®, MYMEDIAINFO®, NAREX®, NASDAQ®, NASDAQ 100 INDEX®, NASDAQ - FINANCIAL®, NASDAQ BIOTECHNOLOGY INDEX®, NASDAQ CANADA®, NASDAQ CANADA COMPOSITE INDEX®, NASDAQ CANADA INDEX®, NASDAQ CAPITAL MARKET®, NASDAQ COMPOSITE®, NASDAQ COMPOSITE INDEX®, NASDAQ COMPUTER INDEX®, NASDAQ DIVIDEND ACHIEVERS®, NASDAQ DUBAI®, NASDAQ DUBAI ACADEMY®, NASDAQ EUROPE®, NASDAQ EUROPE COMPOSITE INDEX®, NASDAQ FINANCIAL-100 INDEX®, NASDAQ FUTURES®, NASDAQ FX®, NASDAQ GLOBAL MARKET®, NASDAQ GLOBAL SELECT MARKET®, NASDAQ INDUSTRIAL INDEX®, NASDAQ INTERACT®, NASDAQ INTERNET INDEX®, NASDAQ IQ FUND®, NASDAQ IR INSIGHT®, NASDAQ JAPAN®, NASDAQ MARKET ANALYTIX®, NASDAQ MARKET CENTER®, NASDAQ MARKET FORCES®, NASDAQ MARKET VELOCITY®, NASDAQ MARKETSITE®, NASDAQ MAX®, NASDAQ MAX MARKET ANALYTIX®, NASDAQ OMX®, NASDAQ OMX ALPHA INDEXES®, NASDAQ OMX GREEN ECONOMY INDEX®, NASDAQ OMX NORDIC®, NASDAQ PRIVATE MARKET®, NASDAQ Q-50 INDEX®, NASDAQ TELECOMMUNICATIONS INDEX®, NASDAQ TOTALVIEW®, NASDAQ TRADER®, NASDAQ TRANSPORTATION INDEX®, NASDAQ US ALL MARKET®, NASDAQ WORKSTATION®, NASDAQ WORKSTATION II®, NASDAQ WORLD®, NASDAQ-100®, NASDAQ-100 EUROPEANFUND®, NASDAQ-100 EUROPEAN TRACKER®, NASDAQ-100 EUROPEAN TRACKER FUND®, NASDAQ-100 INDEX®, NASDAQ-100 INDEX EUROPEAN TRACKER FUND®, NASDAQ-100 INDEX TRACKING STOCK®, NDX®, NEWS RELEASE EXPRESS®, NFX®, NFX WORLD CURRENCY FUTURES®, NLX®, NOIS®, NORDIX®, NPM®, OMX®, OMX COPENHAGEN 20®, OMX HELSINKI 25®, OMX STIBOR FUTURE®, OMX STOCKHOLM 30®, OMX TECHNOLOGY®, OMXC25®, OMXH25®, OMXS30®, OMXS3FUT®, ON THE WIRE®, OTW®, OVERUNDER®, PHILADELPHIA STOCK EXCHANGE®, PHLX®, PHLX XL®, PIXL®, PRECISE TRADE®, PRF®, Q THE NEXT GREAT THING®, QQQ®, QTARGET®, QVIEW®, R3®, RISKWAY®, RISKWRAPPER®, RISKXPOSURE®, RX®, S.A.X.E.S®, SECONDMARKET®, SIGNALXPRESS SX®, SMARTS®, SMARTSONLINE®, STINA®, STRUCTURED LIQUIDITY PROGRAM®, THE NASDAQ STOCK MARKET®, THE STOCK MARKET FOR THE NEXT 100 YEARS®, TOTAL EQUITY SOLUTION®, TRADEGUARD®, TX®, ULL®, ULTRA LOW LATENCY®, ULTRAFEED®, VX PROXY®, WIZER®, XDE®, XO DORSEY WRIGHT & ASSOCIATES®, YFIRUNDIR®, YLIALLE®, ÖVERUNDER®

iii

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To the extent a name, logo or design does not appear on the above list, such lack of appearance does not constitute a waiver of any intellectual property rights that Nasdaq has established in its product or service names or logos, or in product configurations or designs, all of which rights are expressly reserved.

FINRA® and TRADE REPORTING FACILITY® are registered trademarks of FINRA.

All other trademarks and service marks used herein are the property of their respective owners.

This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q for IPOs is based on data generated internally by us, which includes best efforts underwritings; therefore, the data may not be comparable to other publicly-available IPO data. Data in this Quarterly Report on Form 10-Q for new listings of equity securities on The Nasdaq Stock Market is based on data generated internally by us, which includes best efforts underwritings, issuers that switched from other listing venues, closed-end funds and ETPs. Data in this Quarterly Report on Form 10-Q for IPOs and new listings of equity securities on the Nasdaq Nordic and Nasdaq Baltic exchanges also is based on data generated internally by us. IPOs and new listings data is presented as of period end. While we are not aware of any misstatements regarding industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors. We refer you to the “Risk Factors” section in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, the “Risk Factors” section in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 that was filed with the SEC on May 10, 2017, and the “Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 that was filed with the SEC on March 1, 2017.

* * * * * *

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

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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 Quarterly Report on Form 10-Q contains these types of statements. Words such as “may,” “will,” “could,” “should,” “anticipates,” “envisions,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words or terms of similar substance used in connection with any discussion of future expectations as to industry and regulatory developments or business initiatives and strategies, future operating results or financial performance, and other future developments identify forward-looking statements. These include, among others, statements relating to:


•	our 2017 outlook;


•	the integration of acquired businesses, including accounting decisions relating thereto;


•	the scope, nature or impact of acquisitions, divestitures, investments, joint ventures or other transactional activities;


•	the effective dates for, and expected benefits of, ongoing initiatives, including transactional activities and other strategic, restructuring, technology, de-leveraging and capital return initiatives;


•	our products, order backlog and services;


•	the impact of pricing changes;


•	tax matters;


•	the cost and availability of liquidity and capital; and


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

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, including the fact that such integration may be more difficult, time consuming or costly than expected, and our ability to realize synergies from business combinations and acquisitions;


•	loss of significant trading and clearing volumes or values, fees, market share, listed companies, data products customers or other customers;


•	our ability to keep up with rapid technological advances and adequately address cybersecurity risks;


•	economic, political and market conditions and fluctuations, including interest rate and foreign currency risk, inherent in U.S. and international operations;


•	the performance and reliability of our technology and technology of third parties;


•	our ability to continue to generate cash and manage our indebtedness; and


•	adverse changes that may occur in the litigation or regulatory areas, or in the securities markets generally.

Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the uncertainty and any risk related to forward-looking statements that we make. These risk factors are discussed under the caption “Part II. Item 1A. Risk Factors,” in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 that was filed with the SEC on May 10, 2017, and more fully described in the "Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 that was filed with the SEC on March 1, 2017. 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 Quarterly Report on Form 10-Q, including “Part 1. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the condensed 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.

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PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

Nasdaq, Inc.

Condensed Consolidated Balance Sheets

(in millions, except share and par value amounts)



	June 30, 2017			December 31, 2016
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	356		$	403
Restricted cash	18			15
Financial investments, at fair value	300			245
Receivables, net	392			429
Default funds and margin deposits	3,671			3,301
Other current assets	184			167
Total current assets	4,921			4,560
Property and equipment, net	384			362
Deferred tax assets	633			717
Goodwill	6,237			6,027
Intangible assets, net	2,102			2,094
Other non-current assets	383			390
Total assets	$	14,660		$	14,150

Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	149		$	175
Section 31 fees payable to SEC	169			108
Accrued personnel costs	124			207
Deferred revenue	265			162
Other current liabilities	115			129
Default funds and margin deposits	3,671			3,301
Short-term debt	494			—
Total current liabilities	4,987			4,082
Long-term debt	3,058			3,603
Deferred tax liabilities	732			720
Non-current deferred revenue	161			171
Other non-current liabilities	146			144
Total liabilities	9,084			8,720

Commitments and contingencies
Equity
Nasdaq stockholders’ equity:
Common stock, $0.01 par value, 300,000,000 shares authorized, shares issued: 171,027,324 at June 30, 2017 and 170,501,186 at December 31, 2016; shares outstanding: 166,392,912 at June 30, 2017 and 166,579,468 at December 31, 2016	2			2
Additional paid-in capital	3,011			3,104
Common stock in treasury, at cost: 4,634,412 shares at June 30, 2017 and 3,921,718 shares at December 31, 2016	(225		)	(176		)
Accumulated other comprehensive loss	(892		)	(979		)
Retained earnings	3,680			3,479
Total Nasdaq stockholders’ equity	5,576			5,430
Total liabilities and equity	$	14,660		$	14,150

See accompanying notes to condensed consolidated financial statements.

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Nasdaq, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(in millions, except per share amounts)



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenues:
Market Services	$	620		$	532		$	1,226		$	1,104
Corporate Services	164			162			325			305
Information Services	144			134			282			268
Market Technology	72			69			138			126
Total revenues	1,000			897			1,971			1,803
Transaction-based expenses:
Transaction rebates	(304		)	(256		)	(606		)	(541		)
Brokerage, clearance and exchange fees	(94		)	(82		)	(180		)	(169		)
Revenues less transaction-based expenses	602			559			1,185			1,093
Operating expenses:
Compensation and benefits	163			164			324			316
Professional and contract services	38			35			74			70
Computer operations and data communications	30			27			60			52
Occupancy	23			19			46			39
General, administrative and other	30			17			49			32
Marketing and advertising	8			8			15			14
Depreciation and amortization	47			41			92			79
Regulatory	8			6			16			13
Merger and strategic initiatives	11			35			17			44
Restructuring charges	—			33			—			41
Total operating expenses	358			385			693			700
Operating income	244			174			492			393
Interest income	2			1			4			2
Interest expense	(36		)	(32		)	(73		)	(60		)
Other investment income	1			2			2			3
Net income from unconsolidated investees	2			1			6			3
Income before income taxes	213			146			431			341
Income tax provision	66			76			114			139
Net income attributable to Nasdaq	$	147		$	70		$	317		$	202
Per share information:
Basic earnings per share	$	0.89		$	0.42		$	1.91		$	1.23
Diluted earnings per share	$	0.87		$	0.42		$	1.87		$	1.20
Cash dividends declared per common share	$	0.38		$	—		$	0.70		$	0.57

See accompanying notes to condensed consolidated financial statements.

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Nasdaq, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in millions)



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net income	$	147		$	70		$	317		$	202
Other comprehensive income (loss):
Foreign currency translation gains (losses):
Net foreign currency translation gains (losses)	124			(127		)	166			11
Income tax benefit (expense)	(29		)	37			(79		)	(7		)
Total other comprehensive income (loss), net of tax	95			(90		)	87			4
Comprehensive income (loss) attributable to Nasdaq	$	242		$	(20	)	$	404		$	206

See accompanying notes to condensed consolidated financial statements.

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Nasdaq, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in millions)



	Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	317		$	202
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	92			79
Share-based compensation	34			35
Deferred income taxes	8			(7		)
Non-cash restructuring charges	—			8
Net income from unconsolidated investees	(6		)	(3		)
Other reconciling items included in net income	21			4
Net change in operating assets and liabilities, net of effects of acquisitions:
Receivables, net	34			(6		)
Other assets	22			15
Accounts payable and accrued expenses	(34		)	5
Section 31 fees payable to SEC	61			57
Accrued personnel costs	(87		)	(53		)
Deferred revenue	76			111
Other liabilities	(24		)	(18		)
Net cash provided by operating activities	514			429
Cash flows from investing activities:
Purchases of trading securities	(234		)	(245		)
Proceeds from sales and redemptions of trading securities	201			194
Purchases of available-for-sale investment securities	(12		)	(8		)
Proceeds from maturities of available-for-sale investment securities	6			7
Acquisition of businesses, net of cash and cash equivalents acquired	—			(1,460		)
Purchases of property and equipment	(64		)	(51		)
Other investment activities	(1		)	(10		)
Net cash used in investing activities	(104		)	(1,573		)
Cash flows from financing activities:
Proceeds from commercial paper, net	494			—
Repayments of long-term debt	(670		)	(1,033		)
Payment of debt extinguishment cost	(9		)	—
Proceeds from utilization of credit commitment, net of debt issuance costs	10			833
Proceeds from issuances of senior unsecured notes and term loan facility	—			1,558
Cash paid for repurchase of common stock	(156		)	(45		)
Cash dividends	(116		)	(94		)
Proceeds received from employee stock activity	30			28
Payments related to employee shares withheld for taxes	(49		)	(57		)
Proceeds (disbursements) of customer funds	2			(38		)
Net cash (used in) provided by financing activities	(464		)	1,152
Effect of exchange rate changes on cash and cash equivalents and restricted cash	10			1
Net increase (decrease) in cash and cash equivalents and restricted cash	(44		)	9
Cash and cash equivalents and restricted cash at beginning of period	418			357
Cash and cash equivalents and restricted cash at end of period	$	374		$	366
Supplemental Disclosure Cash Flow Information
Cash paid for:
Interest	$	97		$	67
Income taxes, net of refund	$	59		$	127

See accompanying notes to condensed consolidated financial statements.

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Nasdaq, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Organization and Nature of Operations

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

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

Market Services

Our Market Services segment includes our Equity Derivative Trading and Clearing, Cash Equity Trading, FICC, and Trade Management Services businesses. We operate multiple exchanges and other marketplace facilities across several asset classes, including derivatives, commodities, cash equity, debt, structured products and ETPs. In addition, in some countries where we operate exchanges, we also provide broker services, clearing, settlement and central depository services. Our transaction-based platforms provide market participants with the ability to access, process, display and integrate orders and quotes. The platforms allow the routing and execution of buy and sell orders as well as the reporting of transactions, providing fee-based revenues.

In the U.S., we operate six electronic options exchanges and three cash equity exchanges. The Nasdaq Stock Market, the largest of our cash equities exchanges, is the largest single venue of liquidity for trading U.S.-listed cash equities. We also operate an electronic platform for trading of U.S. Treasuries and NFX, a U.S. based energy derivatives market which offers cash settled energy derivatives based on key energy benchmarks including oil, natural gas and U.S. power. In addition, we also operate three Canadian markets for the trading of Canadian-listed securities.

In Europe, we operate exchanges in Stockholm (Sweden), Copenhagen (Denmark), Helsinki (Finland), and Reykjavik (Iceland), as well as the clearing operations of Nasdaq Clearing. We also operate exchanges in Tallinn (Estonia), Riga (Latvia) and Vilnius (Lithuania) as Nasdaq Baltic. Collectively, Nasdaq Nordic and Nasdaq Baltic offer trading in cash equities and depository receipts, warrants, convertibles, rights, fund units and exchange traded funds as well as trading and clearing of derivatives and clearing of resale and repurchase agreements.

Nasdaq Commodities is the brand name for Nasdaq’s worldwide suite of commodity-related products and services. Nasdaq Commodities’ offerings include oil, power, natural gas

and carbon emission markets, tanker and dry cargo freight, seafood derivatives, iron ore, electricity certificates and clearing services. The products are listed on two of Nasdaq’s derivatives exchanges, Nasdaq Oslo ASA and NFX.

Through our Trade Management Services business, we provide market participants with a wide variety of alternatives for connecting to and accessing our markets via a number of different protocols used for quoting, order entry, trade reporting, DROP functionality and connectivity to various data feeds. We also provide co-location services to market participants, whereby firms may lease cabinet space and power to house their own equipment and servers within our data centers. Our broker services operations offer technology and customized securities administration solutions to financial participants in the Nordic market.

Corporate Services

Our Corporate Services segment includes our Corporate Solutions and Listing Services businesses.

Our Corporate Solutions business serves corporate clients, including companies listed on our exchanges and private companies. We help organizations manage the two-way flow of information with their key constituents, including their board members and investors, and with clients and the public through our suite of advanced technology, analytics, and consultative services. Our Corporate Solutions business primarily offers products to serve the following key areas: IR intelligence, public relations, board and leadership, and digital media services.

Our Listing Services business includes our U.S. and European Listing Services businesses. We operate a variety of listing platforms around the world to provide multiple global capital raising solutions for private and public companies. Our main listing markets are The Nasdaq Stock Market and the Nasdaq Nordic and Nasdaq Baltic exchanges. Through Nasdaq First North, our Nordic and Baltic operations also offer alternative marketplaces for smaller companies and growth companies. Our Listing Services business also includes NPM, which provides services for private companies.

As of June 30, 2017, there were 2,912 total listings on The Nasdaq Stock Market, including 345 separately listed ETPs. The combined market capitalization was approximately $10.1 trillion. In Europe, the Nasdaq Nordic and Nasdaq Baltic exchanges, together with Nasdaq First North, were home to 945 listed companies with a combined market capitalization of approximately $1.5 trillion.

Information Services

Our Information Services segment includes our Data Products and our Index Licensing and Services businesses. Our Data Products business sells and distributes historical and real-time quote and trade information to market participants and data distributors. Our data products enhance transparency of the market activity within the exchanges that we operate and

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provide critical information to professional and non-professional investors globally.

Our Index Licensing and Services business develops and licenses Nasdaq branded indexes, associated derivatives, and financial products and also provides custom calculation services for third-party clients. As of June 30, 2017, we had 316 ETPs licensed to Nasdaq’s indexes which had $147 billion of assets under management.

Market Technology

Our Market Technology segment is a leading global technology solutions provider and partner to exchanges, clearing organizations, central securities depositories, regulators, banks, brokers and corporate businesses. Our Market Technology business is the sales channel for our complete global offering to other marketplaces.

Market Technology provides technology solutions for trading, clearing, settlement, surveillance and information dissemination to markets with wide-ranging requirements, from the leading markets in the U.S., Europe and Asia to emerging markets in the Middle East, Latin America, and Africa. Our marketplace solutions can handle a wide array of assets, including cash equities, equity derivatives, currencies, various interest-bearing securities, commodities and energy products, and are currently powering more than 90 marketplaces in 50 countries. Market Technology also provides market surveillance services to broker-dealer firms worldwide, as well as enterprise governance, risk management and compliance software solutions.

2. Basis of Presentation and Principles of Consolidation

The condensed 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 condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation.

As permitted under U.S. GAAP, certain footnotes or other financial information can be condensed or omitted in the interim condensed consolidated financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in Nasdaq’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Certain prior year amounts have been reclassified to conform to the current year presentation.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Subsequent Events

We have evaluated subsequent events through the issuance date of this Quarterly Report on Form 10-Q.

Tax Matters

We use the asset and liability method to determine income taxes on all transactions recorded in the condensed consolidated financial statements. 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 condensed consolidated financial statements. Interest and/or penalties related to income tax matters are recognized in income tax expense.

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



	Three Months Ended June 30,						Percentage Change
	2017			2016			Percentage Change
	($ in millions)
Income tax provision	$	66		$	76		(13.2	)%
Effective tax rate	31.0		%	52.1		%

	Six Months Ended June 30,
	($ in millions)
	2017			2016			Percentage Change
Income tax provision	$	114		$	139		(18.0	)%
Effective tax rate	26.5		%	40.8		%

The lower income tax provision and effective tax rate in the second quarter and first six months of 2017 when compared with the same periods in 2016 is primarily due to the recognition of excess tax benefits associated with the vesting of employee share-based compensation arrangements. See “Recently Adopted Accounting Pronouncements” below for further

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discussion. In addition, in the second quarter of 2017, we recognized previously unrecognized tax benefits associated with positions taken in prior years which also contributed to the lower income tax provision and effective tax rate in both periods. Furthermore, in the second quarter of 2016, we received an unfavorable ruling from the Finnish Supreme Administrative Court which resulted in an increase to tax expense. The lower income tax provision in the second quarter and first six months of 2017 is partially offset by an increase in income tax expense associated with the increase in income before taxes in the second quarter and first six months of 2017.

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 the history of pre-tax earnings and losses, are taken into account in assessing the ability to realize deferred tax assets.

Nasdaq and its eligible subsidiaries file a consolidated U.S. federal income tax return and applicable state and local income tax returns and non-U.S. income tax returns. Federal income tax returns for the years 2011 through 2016 are subject to examination by the Internal Revenue Service. Several state tax returns are currently under examination by the respective tax authorities for the years 2005 through 2014 and we are subject to examination for the years 2015 and 2016. Non-U.S. tax returns are subject to examination by the respective tax authorities for the years 2008 through 2016. 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. Based on new information which became available to us in the second quarter of 2017, we recognized $4 million in previously unrecognized tax benefits associated with positions taken in prior years. In addition, we anticipate that the amount of unrecognized tax benefits at June 30, 2017 will significantly decrease in the next twelve months as we expect to settle certain tax audits.

From 2009 through 2012, we recorded tax benefits associated with certain interest expense incurred in Sweden. Our position is supported by a 2011 ruling we received from the Swedish Supreme Administrative Court. However, under new legislation effective January 1, 2013, limitations are imposed on certain forms of interest expense. Because this legislation is unclear with regard to our ability to continue to claim such interest deductions, Nasdaq filed an application for an advance tax ruling with the Swedish Council for Advance Tax Rulings. In June 2014, we received an unfavorable ruling from the Swedish Council for Advance Tax Rulings. We appealed this ruling to the Swedish Supreme Administrative Court; however the Swedish Supreme Administrative Court denied our request for a ruling based on procedural requirements. We have received notices from the Swedish Tax Agency that interest deductions for the years 2013 through 2015 have been disallowed. We have appealed to the Swedish Lower Administrative Court and continue to expect a favorable decision. Since January 1, 2013, we have recorded tax benefits of $53 million associated with this matter. We continue to pay all assessments from the Swedish Tax Agency while this matter is pending. If the Swedish Courts agree with our position we will receive a refund of all paid assessments; if the Swedish Courts disagree with our position, we will record tax expense of $44 million, or $0.26 per diluted share, which is gross of any related U.S. tax benefits and reflects the impact of foreign currency translation. We expect to record recurring quarterly tax benefits of $1 million to $2 million with respect to this matter for the foreseeable future.

Although no new U.S. tax legislation has been enacted, we are currently assessing the impact various tax reform proposals will have on our condensed consolidated financial statements.

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Recently Adopted Accounting Pronouncements



Accounting Standard	Description	Effective Date	Effect on the Financial Statements or Other Significant Matters
Compensation - Stock Compensation In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.”	This ASU involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance requires all income tax effects of awards to be recognized as income tax expense or benefit in the income statement when the awards vest or are settled, as opposed to additional paid-in-capital where it was previously recorded. This guidance impacts the calculation of our total diluted share count for the earnings per share calculation, as calculated under the treasury stock method. It also allows an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. All tax-related cash flows resulting from share-based payments are reported as operating activities on the statement of cash flows. In regards to forfeitures, a policy election is required to either estimate the number of awards that are expected to vest or account for forfeitures as they occur.	We adopted this new standard on January 1, 2017 on a prospective basis for the impacts on the accounting for income taxes and the effect on earnings per share. We have adopted the changes in cash flow statement classification retrospectively.	The adoption resulted in the recognition of excess tax benefit in our provision for income taxes rather than additional paid-in capital, which was immaterial for the three months ended June 30, 2017 and was $23 million for the six months ended June 30, 2017.
Compensation - Stock Compensation In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting.”	This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions.	We adopted this new standard on June 30, 2017 on a prospective basis.	We do not anticipate a material impact on our consolidated financial statements as a result of adopting this standard.

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Recently Issued Accounting Pronouncements



Accounting Standard	Description	Effective Date	Effect on the Financial Statements or Other Significant Matters
Business Combination In January 2017, the FASB issued ASU 2017-01, “Clarifying the Definition of a Business.”	This ASU clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is expected to reduce the number of transactions that need to be further evaluated as businesses. Early adoption is permitted for certain types of transactions.	January 1, 2018, with early adoption permitted.	This new standard is required to be applied prospectively and therefore, may impact how we account for future acquisitions.
Goodwill In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.”	This ASU simplifies how an entity is required to test goodwill for impairment and removes the second step of the goodwill impairment test, which required a hypothetical purchase price allocation if the fair value of a reporting unit is less than its carrying amount. Goodwill impairment will now be measured using the difference between the carrying amount and the fair value of the reporting unit and the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments in this ASU should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.	January 1, 2020, with early adoption as of January 1, 2017 permitted.	We do not anticipate a material impact on our consolidated financial statements at the time of adoption of this new standard as the carrying amounts of our reporting units have been less than their corresponding fair values in recent years. Therefore, the second step of the goodwill impairment test was not required. However, changes in future projections, market conditions and other factors may cause a change in the excess of fair value of our reporting units over their corresponding carrying amounts.
Financial Instruments - Credit Losses In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.”	This ASU changes the impairment model for certain financial instruments. The new model is a forward looking expected loss model and will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance sheet credit exposures. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees and net investments in leases, as well as trade receivables. For available-for-sale debt securities with unrealized losses, credit losses will be measured in a manner similar to today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.	January 1, 2020, with early adoption as of January 1, 2019 permitted.	We are currently assessing the impact that this standard will have on our consolidated financial statements.
Leases In February 2016, the FASB issued ASU 2016-02, “Leases.”	Under this ASU, at the commencement date, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. This guidance is not applicable for leases with a term of 12 months or less. Lessor accounting is largely unchanged.	January 1, 2019, with early adoption permitted.	We are currently assessing the impact that this standard will have on our consolidated financial statements.
Financial Instruments - Overall In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.”	This ASU requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. Under this new guidance, Nasdaq will no longer be able to recognize unrealized holding gains and losses on equity securities classified today as available-for-sale in accumulated other comprehensive income within stockholders’ equity. This new standard does not change the guidance for classifying and measuring investments in debt securities and loans. This new guidance also impacts financial liabilities accounted for under the fair value option and affects the presentation and disclosure requirements for financial assets and liabilities.	January 1, 2018. Early adoption is not permitted.	As we do not have a significant investment in financial instruments impacted by this standard, we do not anticipate a material impact on our consolidated financial statements at the time of adoption of this new standard.
Revenue From Contracts With Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition guidance in Accounting Standards Codification, “Revenue Recognition.”	The new revenue recognition standard sets forth a five-step revenue recognition model to determine when and how revenue is recognized. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration it expects to receive in exchange for those goods or services. The standard also requires more detailed disclosures. The standard provides alternative methods of initial adoption.	January 1, 2018, with early adoption permitted.	See discussion below.

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Revenue From Contracts With Customers

We are currently assessing the expected impact of the adoption of Topic 606 on our consolidated financial statements. We have determined that revenue and expense recognition for our Market Technology business and revenue recognition for our Listing Services business will be impacted, however we currently do not anticipate these changes to have a material impact on our consolidated financial statements at the time of adoption of this new standard. We do not anticipate an impact to revenue and expense recognition for our other businesses.

The following are key items to note regarding the accounting for our Market Technology and Listing Services businesses under Topic 606:


•	revenue recognition for existing and new contracts will be recognized in earlier stages under the new standard;


•	expense recognition for Market Technology contracts will be recognized in earlier stages under the new standard;


•	a portion of revenues and expenses that were previously deferred will be recognized either in prior period revenues, through restatement, or as an adjustment to retained earnings upon adoption of the new standard; and


•	the overall value of our contracts and the timing of cash flows from customers will not change.

We have reviewed all of the existing customer contracts in our Market Technology and Listings businesses and we are currently evaluating the impact of adopting the new standard under both the retrospective and modified approaches and will select a transition approach once we have completed this evaluation. In addition, we are gathering the required information to be disclosed for all businesses.

Market Technology. In our Market Technology business, we enter into contracts with customers to develop technology solutions, license the right to use software, and provide post-contract support and other services to our customers. Under current accounting

policies, we do not recognize revenue or expense until we begin the final stage of the contract as we are not able to establish vendor specific objective evidence of fair value for individual elements of the contract. Under Topic 606, we will no longer defer recognition of revenue and expense until the final stage of the contract. For each of our contracts, we have identified multiple performance obligations, allocated the transaction price to these obligations and will recognize revenue for each of these obligations as they are satisfied. Expenses will no longer be deferred, with the exception of commission expense, but will be recognized as incurred.

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Since revenue and expense will be recognized in earlier stages of the contract, the balance sheet accounts for deferred revenue and costs will decline upon adoption of Topic 606. Due to the complexity of certain contracts, the revenue recognition treatment under the new standard will be dependent on contract-specific terms and may vary in some instances.

Listing Services. Amounts received for initial listing fees and additional listing fees are generally deferred and revenue is recognized over estimated service periods of six and four years, respectively. Under Topic 606, we have identified the performance obligations associated with these services and will record revenue upon satisfaction of each performance obligation. We expect to recognize initial listing fees over a shorter period on average than the current estimated service period. Since we expect to recognize revenues earlier under Topic 606, the balance sheet account for deferred revenue will decline upon adoption.

During the remainder of 2017, we will implement any required changes to our systems and processes to meet the new accounting, reporting and disclosure requirements and will update our internal controls accordingly. We will also review any new contracts entered into throughout the year. We do not believe there are any significant barriers to implementation of the new standard.

* * * * * *

3. Restructuring Charges

2015 Restructuring Plan

During the first quarter of 2015, we performed a comprehensive review of our processes, businesses and systems in a company-wide effort to improve performance, cut costs, and reduce spending. This restructuring plan was completed in the second quarter of 2016.

The following table presents a summary of restructuring plan charges in the Condensed Consolidated Statements of Income:



	June 30, 2016
	Three Months Ended		Six Months Ended
	($ in millions)
Severance	$	18	$	22
Facilities-related	1		1
Asset impairments	5		8
Other	9		10
Total restructuring charges	$	33	$	41

During the second quarter of 2016, we recognized restructuring charges totaling $33 million, including

severance costs of $18 million related to workforce reductions of 188 positions across our organization, $5 million for asset impairments, primarily related to fixed assets and capitalized software that have been retired and $9 million of other charges. For the six months ended June 30, 2016, we recognized restructuring charges totaling $41 million, including severance costs of $22 million related to workforce reductions of 201 positions across our organization, $8 million for asset impairments, primarily related to fixed assets and capitalized software that have been retired and $10 million of other charges.

Restructuring Reserve

Severance

The accrued severance balance was $9 million at June 30, 2017 and $17 million at December 31, 2016. As of June 30, 2017, the accrued severance is included in other current liabilities in the Condensed Consolidated Balance Sheets and will be paid in 2017.

* * * * * *

4. Acquisitions

We completed the following acquisitions in 2016. Financial results of each transaction are included in our Condensed Consolidated Statements of Income from the date of each acquisition.

2016 Acquisitions



	Purchase Consideration		Total Net Assets (Liabilities) Acquired			Total Net Deferred Tax Liability			Acquired Intangible Assets		Goodwill
	(in millions)
ISE	$	1,070	$	83		$	(185	)	$	623	$	549
Boardvantage	242		28			(38		)	111		141
Marketwired	111		(1		)	(5		)	31		86
Nasdaq CXC	116		6			(20		)	76		54

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The amounts in the table above represent the allocation of purchase price as of June 30, 2017. The preliminary allocations of the purchase price were subject to revision during the remainder of 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. Changes to amounts recorded as assets and liabilities may result in a corresponding adjustment to goodwill. We finalized the allocation of the purchase price for Marketwired and Nasdaq CXC in February 2017. In the second quarter of 2017, we finalized the allocation of the price for Boardvantage and ISE. There were no adjustments to the provisional values during the 12 month measurement period for Nasdaq CXC and ISE. In the second quarter of 2016, we recorded a measurement period adjustment of $5 million related to our acquisition of Marketwired which is discussed below under “Acquisition of Marketwired.” In the second quarter of 2017, we recorded a measurement period adjustment of $7 million related to our acquisition of Boardvantage which is discussed below under “Acquisition of Boardvantage.”

See “Intangible Assets” below for further discussion of intangible assets acquired through our 2016 acquisitions.

Acquisition of ISE

On June 30, 2016, we acquired ISE for $1,070 million. We acquired net assets, at fair value, totaling $83 million and recorded a net deferred tax liability of $185 million, comprised of a deferred tax liability of $266 million and a deferred tax asset of $81 million, related to differences in the U.S. GAAP and tax basis of our investment in ISE. ISE is part of our Market Services, Information Services and Market Technology segments.

In May 2016, we issued the 2023 Notes and in June 2016, we issued the 2026 Notes to fund this acquisition. See “1.75% Senior Unsecured Notes,” and “3.85% Senior Unsecured Notes,” of Note 8, “Debt Obligations,” for further discussion.

Acquisition of Boardvantage

In May 2016, we acquired Boardvantage for $242 million ($197 million in cash paid plus $45 million in working capital adjustments, which primarily includes cash acquired). We acquired net assets, at fair value, totaling $28 million and recorded a net deferred tax liability of $45 million, comprised of a deferred tax liability of $46 million and a deferred tax asset of $1 million, related to differences in the U.S. GAAP and tax basis of our investment in Boardvantage. This acquisition expanded our Corporate Solutions board and leadership business within our Corporate Services segment. In the second quarter of 2017, we recorded a measurement period adjustment of $7 million to the estimated fair value of deferred tax assets to reflect a revised assessment following the receipt of new information. The adjustment resulted in an increase to deferred tax assets recorded and a decrease to goodwill. The adjustment did not result in an impact to our Condensed Consolidated Statements of Income. Boardvantage is part of our Corporate Solutions business within our Corporate Services segment.

Nasdaq borrowed $197 million under the revolving credit commitment of a previous credit facility to fund this acquisition.

Acquisition of Marketwired

In February 2016, we acquired Marketwired for $111 million ($109 million in cash paid plus $2 million in working capital adjustments). We acquired net liabilities, at fair value, totaling $1 million and recorded a deferred tax liability of $10 million related to differences in the U.S. GAAP and tax basis of our investment in Marketwired. In the second quarter of 2016, we recorded a measurement period adjustment of $5 million to the estimated fair value of deferred tax liabilities to reflect a revised assessment following the receipt of new information. The adjustment resulted in a decrease to both deferred tax liabilities recorded and goodwill. The adjustment did not result in an impact to our Condensed Consolidated Statements of Income. Marketwired is part of our Corporate Solutions business within our Corporate Services segment.

Nasdaq borrowed $109 million under the revolving credit commitment of a previous credit facility to fund this acquisition.

Acquisition of Nasdaq CXC

In February 2016, we acquired Nasdaq CXC for $116 million ($115 million in cash paid plus $1 million in working capital adjustments). We acquired net assets, at fair value, totaling $6 million and recorded a deferred tax liability of $20 million related to differences in the U.S. GAAP and tax basis of our investment in Nasdaq CXC. Nasdaq CXC is part of our Market Services segment and our Data Products business within our Information Services segment.

Nasdaq used cash on hand and borrowed $55 million under the revolving credit commitment of a previous credit facility to fund this acquisition.

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Intangible Assets

The following table presents the details of acquired intangible assets at the date of each acquisition. All acquired intangible assets with finite lives are amortized using the straight-line method.



	2016
	ISE			Boardvantage			Marketwired			Nasdaq CXC
	($ in millions)
Intangible Assets
Exchange registrations	$	467		$	—		$	—		$	—
Discount rate used	8.6		%	—			—			—
Estimated average useful life	Indefinite			—			—			—
Customer relationships	$	148		$	103		$	29		$	76
Discount rate used	9.1		%	15.5		%	16.4		%	10.3		%
Estimated average useful life	13 years			14 years			6 years			17 years
Trade name	$	8		$	2		$	2		$	—
Discount rate used	8.6		%	15.0		%	15.8		%	—
Estimated average useful life	Indefinite			1 year			2 years			—
Technology	$	—		$	6		$	—		$	—
Discount rate used	—			15.5		%	—			—
Estimated average useful life	—			5 years			—			—
Total intangible assets	$	623		$	111		$	31		$	76

Exchange Registrations

As part of our acquisition of ISE we acquired exchange registrations. The exchange registrations represent licenses that provide ISE with the ability to operate its option exchanges. Nasdaq views these intangible assets as a perpetual license to operate the exchanges so long as ISE meets its regulatory requirements. Nasdaq selected a variation of the income approach called the Greenfield Approach to value the exchange registrations. The Greenfield Approach refers to a discounted cash flow analysis that assumes the buyer is building the exchange from a start-up business to a normalized level of operations as of the acquisition date. This discounted cash flow model considers the required resources and eventual returns from the build-out of operational exchanges and the acquisition of customers, once the exchange registrations are obtained. The advantage of this approach is that it reflects the actual expectations that will arise from an investment in the registrations and it directly values the registrations. The Greenfield Approach relies on assumptions regarding projected revenues, margins, capital expenditures, depreciation, and working capital during the two year pre-trade phase, the 10 year ramp-up period, as well as the terminal period.

In developing a discount rate for the exchange registrations, we estimated a weighted-average cost of capital for the overall business and we employed this rate when discounting the cash flows. The resulting discounted cash flows were then tax-effected at the applicable statutory rate.

Customer Relationships

As part of our acquisitions of ISE, Boardvantage, Marketwired, and Nasdaq CXC we acquired customer relationships. Customer relationships represent the non-contractual and contractual relationships with customers.

Methodology

For our acquisitions of ISE, Boardvantage, Marketwired and Nasdaq CXC, customer relationships were valued using the income approach, specifically an excess earnings method. The excess earnings method examines the economic returns contributed by the identified tangible and intangible assets of a company, and then isolates the excess return that is attributable to the intangible asset being valued.

Discount rate

The discount rates used reflect the amount of risk associated with the hypothetical cash flows for the customer relationships relative to the overall business. In developing a discount rate for the customer relationships, we estimated a weighted-average cost of capital for the overall business and we employed this rate when discounting the cash flows. The resulting discounted cash flows were then tax-effected at the applicable statutory rate.

For our acquisitions of Marketwired and Nasdaq CXC, a discounted tax amortization benefit was added to the fair value of the assets under the assumption that the customer relationships would be amortized for tax purposes over a period of 15 years.

Estimated Useful Life

We estimate the useful life based on the historical behavior of the customers and a parallel analysis of the customers using the excess earnings method.

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Pro Forma Results and Acquisition-related Costs

The condensed consolidated financial statements for the three and six months ended June 30, 2017 and 2016 include the financial results of the above 2016 acquisitions from the date of each acquisition. Pro forma financial results have not been presented since these acquisitions both individually and in the aggregate were not material to our financial results.

Acquisition-related costs for the transactions described above were expensed as incurred and are included in merger and strategic initiatives expense in the Condensed Consolidated Statements of Income.

* * * * * *

5. Goodwill and Acquired Intangible Assets

Goodwill

The following table presents the changes in goodwill by business segment during the six months ended June 30, 2017:



	Market Services		Corporate Services			Information Services		Market Technology		Total
	(in millions)
Balance at December 31, 2016	$	3,390	$	674		$	1,806	$	157	$	6,027
Measurement period adjustment	—		(7		)	—		—		(7		)
Foreign currency translation adjustment	114		16			74		13		217
Balance at June 30, 2017	$	3,504	$	683		$	1,880	$	170	$	6,237

In the second quarter of 2017, we recorded a measurement period adjustment of $7 million to the estimated fair value of deferred tax assets related to our acquisition of Boardvantage. See “Acquisition of Boardvantage,” of Note 4, “Acquisitions,” for further discussion of the Boardvantage acquisition. The adjustment was made to reflect a revised assessment of deferred tax assets following the receipt of new information. The adjustment resulted in an increase to deferred tax assets recorded and a decrease to goodwill and is reflected in the above table. The measurement period adjustment was recorded as a revision in our second quarter 2017 Condensed Consolidated Balance Sheets. The adjustment did not result in an impact to our Condensed Consolidated Statements of Income.

As of June 30, 2017, the amount of goodwill that is expected to be deductible for tax purposes in future periods is $836 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 six months ended June 30, 2017 and 2016; however, events such as extended economic weakness or unexpected significant declines in operating results of a reporting unit may result in goodwill impairment charges in the future.

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Acquired Intangible Assets

The following table presents details of our total acquired intangible assets, both finite- and indefinite-lived:



	June 30, 2017										December 31, 2016
	Gross Amount			Accumulated Amortization			Net Amount			Weighted-Average Useful Life (in Years)	Gross Amount			Accumulated Amortization			Net Amount			Weighted-Average Useful Life (in Years)
	(in millions)										(in millions)
Finite-Lived Intangible Assets
Technology	$	31		$	(20	)	$	11		6	$	38		$	(24	)	$	14		5
Customer relationships	1,387			(499		)	888			18	1,394			(464		)	930			18
Other	5			(4		)	1			8	7			(6		)	1			6
Foreign currency translation adjustment	(126		)	46			(80		)		(160		)	58			(102		)
Total finite-lived intangible assets	$	1,297		$	(477	)	$	820			$	1,279		$	(436	)	$	843
Indefinite-Lived Intangible Assets
Exchange and clearing registrations	$	1,257		$	—		$	1,257			$	1,257		$	—		$	1,257
Trade names	129			—			129				130			—			130
Licenses	52			—			52				52			—			52
Foreign currency translation adjustment	(156		)	—			(156		)		(188		)	—			(188		)
Total indefinite-lived intangible assets	$	1,282		$	—		$	1,282			$	1,251		$	—		$	1,251
Total intangible assets	$	2,579		$	(477	)	$	2,102			$	2,530		$	(436	)	$	2,094

Amortization expense for acquired finite-lived intangible assets was $22 million for the three months ended June 30, 2017, $19 million for the three months ended June 30, 2016, $45 million for the six months ended June 30, 2017, and $36 million for the six months ended June 30, 2016. The increase in amortization expense in 2017 compared with 2016 was primarily due to additional acquired intangible assets in the second quarter of 2016.

The estimated future amortization expense (excluding the impact of foreign currency translation adjustments of $80 million as of June 30, 2017) of acquired finite-lived intangible assets as of June 30, 2017 is as follows:



	(in millions)
2017⁽¹⁾	$	49
2018	90
2019	76
2020	75
2021	74
2022 and thereafter	536
Total	$	900

____________


⁽¹⁾	Represents the estimated amortization to be recognized for the remaining six months of 2017.

6. Investments

The following table presents the details of our investments:



	June 30, 2017		December 31, 2016
	(in millions)
Trading securities	$	277	$	228
Available-for-sale investment securities	23		17
Equity method investments	133		124
Cost method investments	149		144

Trading Securities

Trading securities, which are included in financial investments, at fair value in the Condensed Consolidated Balance Sheets, are primarily comprised of highly rated European government debt securities, of which $160 million as of June 30, 2017 and $172 million as of December 31, 2016, are assets utilized to meet regulatory capital requirements primarily for our clearing operations at Nasdaq Clearing.

Available-for-Sale Investment Securities

Available-for-sale investment securities, which are included in financial investments, at fair value in the Condensed Consolidated Balance Sheets, are primarily comprised of short-

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term certificates of deposit and commercial paper. As of June 30, 2017 and December 31, 2016, the cumulative unrealized gains and losses on these securities were immaterial.

Equity Method Investments

As of June 30, 2017 and December 31, 2016, our equity method investments primarily included equity interests in OCC and EuroCCP N.V.

The carrying amounts of our equity method investments are included in other non-current assets in the Condensed Consolidated Balance Sheets.

Net income recognized from our equity interest in the earnings and losses of these equity method investments was $2 million for the three months ended June 30, 2017, $1 million for the three months ended June 30, 2016, $6 million for the six months ended June 30, 2017, and $3 million for the six months ended June 30, 2016. The increase in the three and six months ended June 30, 2017 compared with the same periods in 2016 was primarily due to our additional 20.0% ownership interest in OCC, which we acquired in connection with our acquisition of ISE on June 30, 2016, bringing our total ownership interest in OCC to 40.0%. These increases were partially offset by $2 million of wind down costs associated with an equity method investment that was previously written off.

Capital Contribution to OCC

In March 2015, in connection with being designated systemically important by the Financial Stability Oversight Council, OCC implemented a capital plan under which the options exchanges that are OCC’s stockholders made new capital contributions to OCC, committed to make further capital contributions in the future under certain specified circumstances, and received certain commitments from OCC with respect to future dividend payments and related matters. Under the OCC capital plan, OCC’s existing exchange stockholders, including Nasdaq and ISE, each contributed a pro-rata share of $150 million in new equity capital. Nasdaq’s and ISE’s capital contributions were each $30 million. OCC’s exchange stockholders also committed to provide, as may become necessary from time to time, additional replenishment

capital on a pro-rata basis if certain capital thresholds are triggered. For its part, OCC adopted specific policies with respect to fees, customer refunds and stockholder dividends, which envision an annual dividend payment to its stockholders equal to the portion of OCC’s after-tax income that exceeds OCC’s capital requirements after payment of refunds to OCC’s clearing members (with such customer refunds generally to constitute 50% of the portion of OCC’s pre-tax income that exceeds OCC’s capital requirements). After the SEC staff approved the OCC capital plan and the stockholders made their capital contributions, the plan’s further effectiveness was suspended under the applicable SEC rules because certain parties petitioned the full Commission to reconsider the capital plan’s approval. This stay was lifted by the SEC in September 2015, allowing OCC to implement the plan and in February 2016, the SEC issued an order approving the OCC capital plan as previously implemented and dismissed the petitions challenging that plan. The petitioners filed for a stay of the SEC’s order, which would have blocked OCC from paying a dividend under the OCC capital plan. The Federal Court of Appeals for the District of Columbia Circuit, or the Court of Appeals, denied the requested stay, permitting OCC to pay a dividend which Nasdaq received in February 2016. The petitioners also appealed the SEC’s order to the Court of Appeals . The Court of Appeals heard arguments on the case in March 2017. The case remains pending until the court announces its decision.

Cost Method Investments

The carrying amount of our cost method investments is included in other non-current assets in the Condensed Consolidated Balance Sheets. As of June 30, 2017 and December 31, 2016, our cost method investments primarily represented our 5% ownership interest in Borsa Istanbul, and our 5% ownership interest in LCH.Clearnet Group Limited.

The Borsa Istanbul shares, which were issued to us in the first quarter of 2014, are part of the consideration received under a market technology agreement. This investment has a cost basis of $75 million which is guaranteed to us via a put option negotiated as part of the market technology agreement.

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7. Deferred Revenue

Deferred revenue represents consideration received that is yet to be recognized as revenue. The changes in our deferred revenue during the six months ended June 30, 2017 and 2016 are reflected in the following table:



	Initial Listing Revenues			Listing of Additional Shares Revenues			Annual Renewal and Other Revenues			Market Technology Revenues			Total
	(in millions)
Balance at January 1, 2017	$	54		$	37		$	57		$	185		$	333
Additions	7			6			392			89			494
Revenue recognized	(8		)	(12		)	(285		)	(111		)	(416		)
Translation adjustment	—			—			1			14			15
Balance at June 30, 2017	$	53		$	31		$	165		$	177		$	426

Balance at January 1, 2016	$	59		$	53		$	28		$	187		$	327
Additions	5			7			428			118			558
Revenue recognized	(9		)	(15		)	(284		)	(109		)	(417		)
Translation adjustment	—			—			1			5			6
Balance at June 30, 2016	$	55		$	45		$	173		$	201		$	474

The additions and revenue recognized for initial listing revenues, listing of additional shares revenues and annual renewal and other revenues primarily reflect revenues from our Listing Services business within our Corporate Services segment.

For our market technology contracts, total revenues, as well as costs incurred, are deferred until significant customizations are completed and delivered. Once delivered, deferred revenue and the related deferred costs are recognized over the post-contract support period. For these market technology contracts, we have included the deferral of costs in other current assets and other non-current assets in the Condensed Consolidated Balance Sheets.

At June 30, 2017, we estimate that our deferred revenue, which is primarily corporate services and market technology revenues, will be recognized in the following years:



	Initial Listing Revenues		Listing of Additional Shares Revenues		Annual Renewal and Other Revenues		Market Technology Revenues		Total
	(in millions)
Fiscal year ended:
2017⁽¹⁾	$	8	$	10	$	152	$	43	$	213
2018	15		12		11		44		82
2019	13		6		1		35		55
2020	9		3		1		32		45
2021	5		—		—		14		19
2022 and thereafter	3		—		—		9		12
	$	53	$	31	$	165	$	177	$	426

____________


⁽¹⁾	Represents deferred revenue that is anticipated to be recognized over the remaining six months of 2017.

The timing of recognition of our deferred market technology revenues is primarily dependent upon the completion of customization and any significant modifications made pursuant to existing market technology contracts. As such, as it relates to market technology revenues, the timing represents our best estimate.

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8. Debt Obligations

The following table presents the changes in the carrying amount of our debt obligations during the six months ended June 30, 2017:



	December 31, 2016		Additions		Payments, Accretion and Other			June 30, 2017
	(in millions)
Short-term debt - commercial paper	$	—	$	813	$	(319	)	$	494
Long-term debt:
5.55% senior unsecured notes due January 15, 2020	598		—		—			598
5.25% senior unsecured notes repaid on May 26, 2017	369		—		(369		)	—
3.875% senior unsecured notes due June 7, 2021	625		—		56			681
4.25% senior unsecured notes due June 1, 2024	495		—		1			496
1.75% senior unsecured notes due May 19, 2023	622		—		55			677
3.85% senior unsecured notes due June 30, 2026	495		—		1			496
$400 million senior unsecured term loan facility due November 25, 2019 (average interest rate of 2.39% for the period January 1, 2017 through June 30, 2017)	399		—		(299		)	100
$1 billion revolving credit commitment due April 25, 2022 (average interest rate of 2.40% for the period April 25, 2017 through June 30, 2017)	—		15		(5		)	10
Total long-term debt	3,603		15		(560		)	3,058
Total debt obligations	$	3,603	$	828	$	(879	)	$	3,552

Commercial Paper Program

In April 2017, we entered into a U.S. dollar commercial paper program, or the Commercial Paper Program. The Commercial Paper Program is supported by our 2017 Credit Facility which provides liquidity support for the repayment of commercial paper issued through the Commercial Paper Program. See “2017 Credit Facility” below for further discussion of our 2017 Credit Facility. The effective interest rate of commercial paper issuances fluctuate as short term interest rates and demand fluctuate. The fluctuation of these rates due to market conditions may impact our interest expense.

In May 2017, we used a combination of cash on hand and net proceeds from the sale of commercial paper to redeem all of our $370 million aggregate principal amount of 5.25% senior unsecured notes, or the 2018 Notes. In addition, in June 2017, we used net proceeds from the sale of commercial paper to repay $300 million of the amount outstanding on the 2016 Credit Facility. See “Early Extinguishment of 2018 Notes” and “2016 Credit Facility” below for further discussion.

As of June 30, 2017, commercial paper notes in the table above reflect the aggregate principal amount, less the unamortized discount which is being accreted through interest expense over the life of the applicable notes. The original maturities of these notes range from 14 to 91 days and the weighted-average maturity is 44 days. The weighted-average effective interest rate is 1.53% per annum.

Senior Unsecured Notes

Our senior unsecured notes were all 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 June 30, 2017, 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. Our senior unsecured notes are general unsecured obligations of ours and rank equally with all of our existing and future unsubordinated obligations and they are not guaranteed by any of our subsidiaries. The senior unsecured notes were issued under indentures that, among other things, limit our ability to consolidate, merge or sell all or substantially all of our assets, create liens, and enter into sale and leaseback transactions.

With the exception of the 2020 Notes, upon a change of control triggering event (as defined in the various note indentures), the terms require us to repurchase all or part of each holder’s notes for cash equal to 101% of the aggregate principal amount purchased plus accrued and unpaid interest, if any.

5.55% Senior Unsecured Notes

In January 2010, Nasdaq issued the 2020 Notes. The 2020 Notes pay interest semiannually at a rate of 5.55% per annum until January 15, 2020.

Early Extinguishment of 2018 Notes

In December 2010, Nasdaq issued the 2018 Notes. The 2018 Notes paid interest semiannually at a rate of 5.25% per annum.

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In May 2017, we redeemed all of our 2018 Notes using a combination of cash on hand and net proceeds from the sale of commercial paper issued through the Commercial Paper Program. See “Commercial Paper Program” above for further discussion of our Commercial Paper Program. In connection with the early extinguishment of the 2018 Notes, we recorded a pre-tax charge of $9 million, which primarily included a make-whole redemption price premium. This charge is included in general, administrative and other expense in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2017.

3.875% Senior Unsecured Notes

In June 2013, Nasdaq issued the 2021 Notes. The 2021 Notes pay interest annually at a rate of 3.875% per annum until June 7, 2021 and such rate may vary with Nasdaq’s debt rating up to a rate not to exceed 5.875%.

The 2021 Notes have been designated as a hedge of our net investment in certain foreign subsidiaries to mitigate the foreign exchange risk associated with certain investments in these subsidiaries. The increase in the carrying amount of $56 million noted in the “Payments, Accretion and Other” column in the table above primarily reflects the translation of the 2021 Notes into U.S. dollars and is recorded in accumulated other comprehensive loss within stockholders’ equity in the Condensed Consolidated Balance Sheets as of June 30, 2017.

4.25% Senior Unsecured Notes

In May 2014, Nasdaq issued the 2024 Notes. The 2024 Notes pay interest semiannually at a rate of 4.25% per annum until June 1, 2024 and such rate may vary with Nasdaq’s debt rating up to a rate not to exceed 6.25%.

1.75% Senior Unsecured Notes

In May 2016, Nasdaq issued the 2023 Notes. We used the net proceeds from the 2023 Notes and the 2026 Notes to fund our acquisition of ISE. See “Acquisition of ISE,” of Note 4, “Acquisitions,” for further discussion of the ISE acquisition.

The 2023 Notes pay interest annually at a rate of 1.75% per annum until May 19, 2023 and such rate may vary with Nasdaq’s debt rating up to a rate not to exceed 3.75%.

The 2023 Notes have been designated as a hedge of our net investment in certain foreign subsidiaries to mitigate the foreign exchange rate risk associated with certain investments in these subsidiaries. The increase in the carrying amount of $55 million noted in the “Payments, Accretion and Other” column in the table above reflects the translation of the 2023 Notes into U.S. dollars and is recorded in accumulated other comprehensive loss within stockholders’ equity in the Condensed Consolidated Balance Sheets as of June 30, 2017.

3.85% Senior Unsecured Notes

In June 2016, Nasdaq issued the 2026 Notes. We used the net proceeds from the 2023 Notes and the 2026 Notes to fund our acquisition of ISE. See “Acquisition of ISE,” of Note 4, “Acquisitions,” for further discussion of the ISE acquisition.

The 2026 Notes pay interest semiannually at a rate of 3.85% per annum until June 30, 2026 and such rate may vary with Nasdaq’s debt rating up to a rate not to exceed 5.85%.

Credit Facilities

As of June 30, 2017, the amounts in the table above reflect the aggregate principal amount, less the unamortized debt issuance costs which are being accreted through interest expense over the life of the applicable credit facility. Nasdaq is permitted to repay borrowings under our credit facilities at any time in whole or in part, without penalty. We are also required to repay loans outstanding under our credit facilities with net cash proceeds from sales of property and assets of Nasdaq and its subsidiaries (excluding inventory sales and other sales in the ordinary course of business) and casualty and condemnation proceeds, in each case subject to specified exceptions and thresholds.

Our credit facilities contain financial and operating covenants. Financial covenants include a minimum interest expense coverage ratio and a maximum leverage ratio. Operating covenants include, among other things, limitations on Nasdaq’s ability to incur additional indebtedness, grant liens on assets, dispose of assets and pay dividends. Our credit facilities allow us to pay cash dividends on our common stock. The facilities also contain customary affirmative covenants, including access to financial statements, notice of defaults and certain other material events, maintenance of business and insurance, and events of default, including cross-defaults to our material indebtedness.

2017 Credit Facility

In April 2017, Nasdaq entered into the 2017 Credit Facility. The 2017 Credit Facility consists of a $1 billion five-year revolving credit facility (with sublimits for non-dollar borrowings, swingline borrowings and letters of credit), which replaced our 2014 credit facility. See “2014 Credit Facility” below for further discussion. Nasdaq intends to use funds available under the 2017 Credit Facility for general corporate purposes and to provide liquidity support for the repayment of commercial paper issued through the Commercial Paper Program.

As of June 30, 2017, total borrowings under the 2017 Credit Facility were $15 million. We utilized these borrowings for general corporate purposes. Of the $985 million that is available for borrowing, $495 million is required to provide liquidity support for the principal amount outstanding under the Commercial Paper Program as of June 30, 2017. In addition, $1 million has been utilized for a letter of credit. As such, the total remaining amount available under the 2017 Credit Facility was $489 million as of June 30, 2017. See “Commercial Paper Program” above for further discussion of our Commercial Paper Program.

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Borrowings under the revolving credit facility of the 2017 Credit Facility pay interest monthly and swingline borrowings pay interest quarterly at a variable interest rate based on either the LIBOR or the base rate (as defined in the credit agreement) (or other applicable rate with respect to non-dollar borrowings), plus an applicable margin that varies with Nasdaq’s debt rating.

The 2017 Credit Facility includes an option for Nasdaq to propose an increase in the available aggregate amount by up to $500 million, subject to the consent of the lenders funding the increase and certain other conditions.

2016 Credit Facility

In March 2016, Nasdaq entered into the 2016 Credit Facility. In March 2016, loans in an aggregate principal amount of $400 million were drawn under the 2016 Credit Facility and the net proceeds were used to partially repay amounts outstanding under the revolving credit commitment of the 2014 credit facility. See “2014 Credit Facility” below for further discussion of our 2014 credit facility.

Loans under the 2016 Credit Facility pay interest monthly at a variable interest rate based on either the LIBOR or the base rate (or other applicable rate with respect to non-dollar borrowings), plus an applicable margin that varies with Nasdaq’s debt rating.

In June 2017, we used net proceeds from the sale of commercial paper issued through the Commercial Paper Program to repay $300 million of the amount outstanding on the 2016 Credit Facility. The remaining amount outstanding of $100 million is due upon maturity at November 25, 2019. See “Commercial Paper Program” above for further discussion of our Commercial Paper Program. In connection with the partial repayment of the amount outstanding on the 2016 Credit Facility, we recorded a pre-tax charge of $1 million which related to the write-off of unamortized debt issuance costs related to the $300 million payment. This charge is included in general, administrative and other expense in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2017.

2014 Credit Facility

In November 2014, Nasdaq entered into the 2014 credit facility. The 2014 credit facility consisted of a $750 million revolving credit commitment (with sublimits for non-dollar borrowings, swingline borrowings and letters of credit).

Loans under the 2014 credit facility had a variable interest rate based on either the LIBOR or the base rate (as defined in the credit agreement) (or other applicable rate with respect to non-dollar borrowings), plus an applicable margin that varied with Nasdaq’s debt rating.

In April 2017, Nasdaq entered into the 2017 Credit Facility which replaced the 2014 credit facility. As a result, our 2014 credit facility has been terminated. No amounts were outstanding on the 2014 credit facility during 2017. See “2017 Credit Facility” above for further discussion of our 2017 Credit Facility.

Other Credit Facilities

We also have credit facilities related to our Nasdaq Clearing operations in order to provide further liquidity. Credit facilities, which are available in multiple currencies, totaled $182 million at June 30, 2017 and $170 million at December 31, 2016 in available liquidity, none of which was utilized.

Debt Covenants

At June 30, 2017, we were in compliance with the covenants of all of our debt obligations.

9. Retirement Plans

Defined Contribution Savings Plan

We sponsor a 401(k) Plan for U.S. employees. Employees are immediately eligible to make contributions to the plan and are also eligible for an employer contribution match at an amount equal to 100.0% of the first 6.0% of eligible employee contributions. Savings plan expense included in compensation and benefits expense in the Condensed Consolidated Statements of Income was $3 million for the three months ended June 30, 2017, $2 million for the three months ended June 30, 2016, $7 million for the six months ended June 30, 2017 and $5 million for the six months ended June 30, 2016.

Pension and Supplemental Executive Retirement Plans

We maintain non-contributory, defined-benefit pension plans, non-qualified SERPs for certain senior executives and other post-retirement benefit plans for eligible employees in the U.S., collectively referred to as the Nasdaq Benefit Plans. Our pension plans and SERPs are frozen. Future service and salary for all participants do not count toward an accrual of benefits under the pension plans and SERPs. Most employees outside the U.S. are covered by local retirement plans or by applicable social laws. Benefits under social laws are generally expensed in the periods in which the costs are incurred. The total expense for these plans is included in compensation and benefits expense in the Condensed Consolidated Statements of Income and was $4 million for both the three months ended June 30, 2017 and 2016 and $8 million for both the six months ended June 30, 2017 and 2016.

10. Share-Based Compensation

We have a share-based compensation program that provides our board of directors broad discretion in creating employee equity incentives. Share-based awards granted under this program include stock options, restricted stock (consisting of restricted stock units), and PSUs. For accounting purposes, we consider PSUs to be a form of restricted stock.

Summary of Share-Based Compensation Expense

The following table shows the total share-based compensation expense resulting from equity awards and the 15.0% discount for the ESPP for the three and six months ended June 30, 2017 and 2016 in the Condensed Consolidated Statements of Income:

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	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(in millions)
Share-based compensation expense before income taxes	$	19		$	19		$	34		$	35
Income tax benefit	(8		)	(7		)	(14		)	(14		)
Share-based compensation expense after income taxes	$	11		$	12		$	20		$	21

Common Shares Available Under Our Equity Plan

As of June 30, 2017, we had approximately 5.6 million shares of common stock authorized for future issuance under our Equity Plan.

Restricted Stock

We grant restricted stock to most active employees. The grant date fair value of restricted stock awards is based on the closing price at the date of grant less the present value of future cash dividends. Restricted stock awards granted generally vest 25.0% on the second anniversary of the grant date, 25.0% on the third anniversary of the grant date, and 50.0% on the fourth anniversary of the grant date. We generally recognize compensation expense for restricted stock awards on a straight-line basis over the requisite service period of the award, taking into account an estimated forfeiture rate.

Summary of Restricted Stock Activity

The following table summarizes our restricted stock activity for the six months ended June 30, 2017:



	Restricted Stock
	Number of Awards		Weighted-Average Grant Date Fair Value
Unvested balances at January 1, 2017	2,560,578		$	45.92
Granted	610,357		65.89
Vested	(469,431	)	44.05
Forfeited	(135,637	)	49.15
Unvested balances at June 30, 2017	2,565,867		$	50.84

At June 30, 2017, $63 million of total unrecognized compensation cost related to restricted stock is expected to be recognized over a weighted-average period of 1.9 years.

PSUs

The grant date fair value of PSUs is based on the closing price at the date of grant less the present value of future cash dividends. PSUs are based on performance measures that impact the amount of shares that each recipient will receive upon vesting. We report the target number of PSUs granted, unless we have determined that it is more likely than not, based on the actual achievement of performance measures, that an

employee will receive a different amount of shares underlying the PSUs, in which case we report the amount of shares the employee is likely to receive. We have two performance-based long-term PSU programs for certain officers, a one-year performance-based program and a three-year cumulative performance-based program that focuses on TSR.

One-Year PSU Program

Under the one-year performance-based program, an employee may receive from 0.0% to 150.0% of the target amount granted, depending on the achievement of performance measures. These awards vest ratably on an annual basis over a three-year period commencing with the end of the performance period. Compensation cost is recognized over the performance period and the three-year vesting period, taking into account an estimated forfeiture rate.

During 2016, certain grants of PSUs with a one-year performance period exceeded the applicable performance parameters. As a result, an additional 56,533 units above target were considered granted in the first quarter of 2017 and are included in the below table.

Three-Year PSU Program

Under the three-year performance-based program, each individual receives PSUs with a three-year cumulative performance period that vest at the end of the performance period. Compensation cost is recognized over the three-year vesting period. Performance will be determined by comparing Nasdaq’s TSR to two peer groups, each weighted 50.0%. The first peer group consists of exchange companies, and the second peer group consists of all companies in the S&P 500. Nasdaq’s relative performance ranking against each of these groups will determine the final number of shares delivered to each individual under the program. The payout under this program will be between 0.0% and 200.0% of the number of PSUs granted and will be determined by Nasdaq’s overall performance against both peer groups. However, if Nasdaq’s TSR is negative for the three-year performance period, regardless of TSR ranking, the payout will not exceed 100.0% of the number of PSUs granted. We estimate the fair value of PSU’s granted under the three-year PSU program using the Monte Carlo simulation model, as these awards contain a market condition.

Certain grants of PSUs that were issued in 2014 with a three-year performance period exceeded the applicable performance parameters. As a result, an additional 538,892 units above target were considered granted in the first quarter of 2017 and are included in the below table.

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 six months ended June 30, 2017 and 2016:

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	Six Months Ended June 30,
	2017		2016
Weighted-average risk free interest rate⁽¹⁾	1.44	%	0.84	%
Expected volatility⁽²⁾	19.2	%	21.0	%
Weighted-average grant date share price	$69.45		$66.36
Weighted-average fair value at grant date	$81.57		$93.30

____________


⁽¹⁾	The risk-free interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.


⁽²⁾	We use historic volatility for PSU awards issued under the three-year PSU program, as implied volatility data could not be obtained for all the companies in the peer groups used for relative performance measurement within the program.

In addition, the annual dividend assumption utilized in the Monte Carlo simulation model is based on Nasdaq’s dividend yield at the date of grant.

Summary of PSU Activity

The following table summarizes our PSU activity for the six months ended June 30, 2017:



	PSUs
	One-Year Program				Three-Year Program
	Number of Awards		Weighted-Average Grant Date Fair Value		Number of Awards		Weighted-Average Grant Date Fair Value
Unvested balances at January 1, 2017	378,766		$	52.55	1,314,668		$	63.18
Granted	195,847		65.49		803,189		55.55
Vested	(10,729	)	53.72		(1,079,925	)	42.83
Forfeited	(34,703	)	54.27		(24,178	)	88.98
Unvested balances at June 30, 2017	529,181		$	57.20	1,013,754		$	78.20

At June 30, 2017, $13 million of total unrecognized compensation cost related to the one-year PSU program is expected to be recognized over a weighted-average period of 1.6 years. For the three-year PSU program, $33 million of total unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.6 years.

Stock Options

The fair value of stock options are estimated using the Black-Scholes option-pricing model. Each grant has a 10-year life. In January 2017, our CEO received 268,817 performance-based non-qualified stock options which will vest annually over a three-year period, starting at the date of the grant with each

vesting contingent upon the achievement of performance parameters. There were no stock option awards granted during the six months ended June 30, 2016.

Summary of Stock Option Activity

A summary of stock option activity for the six months ended June 30, 2017 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 January 1, 2017	1,406,371		$	22.32	2.65	$	63
Granted	268,817		66.68
Exercised	(1,034,161	)	21.72
Forfeited	(578	)	22.23
Outstanding at June 30, 2017	640,449		$	41.90	5.48	$	19
Exercisable at June 30, 2017	371,632		$	23.98	2.66	$	18

We received net cash proceeds of $21 million from the exercise of 993,745 stock options for the three months ended June 30, 2017 and received net cash proceeds of $22 million from the exercise of 1,034,161 stock options for the six months ended June 30, 2017. We received net cash proceeds of $19 million from the exercise of 540,656 stock options for the three months ended June 30, 2016 and received net cash proceeds of $21 million from the exercise of 627,467 stock options for the six months ended June 30, 2016.

The aggregate intrinsic value in the above table represents the total pre-tax intrinsic value (i.e., the difference between our closing stock price on June 30, 2017 of $71.49 and the exercise price, times the number of shares) based on stock options with an exercise price less than Nasdaq’s closing price of $71.49 as of June 30, 2017, which would have been received by the option holders had the option holders exercised their stock options on that date. This amount can change based on the fair market value of our common stock. The total number of in-the-money stock options exercisable as of June 30, 2017 was 0.4 million. As of June 30, 2016, 2.0 million outstanding stock options were exercisable and the weighted-average exercise price was $25.94.

The total pre-tax intrinsic value of stock options exercised was $49 million for the three months ended June 30, 2017 and $17 million for the three months ended June 30, 2016, $51 million for the six months ended June 30, 2017 and $20 million for the six months ended June 30, 2016.

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ESPP

We have an ESPP under which approximately 2.2 million shares of our common stock have been reserved for future issuance as of June 30, 2017. 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 which totaled $1 million for both the three months ended June 30, 2017 and 2016 and $2 million for both the six months ended June 30, 2017 and 2016.

11. Nasdaq Stockholders’ Equity

Common Stock

At June 30, 2017, 300,000,000 shares of our common stock were authorized, 171,027,324 shares were issued and 166,392,912 shares were outstanding. The holders of common stock are entitled to one vote per share, except that our certificate of incorporation limits the ability of any person to vote in excess of 5.0% of the then-outstanding shares of Nasdaq common stock.

Common Stock in Treasury, at Cost

We account for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Nasdaq stockholders’ equity and included in common stock in treasury, at cost in the Condensed Consolidated Balance Sheets. Shares repurchased under our share repurchase program are currently retired and cancelled. When treasury shares are reissued, they are recorded at the average cost of the treasury shares acquired. We held 4,634,412 shares of common stock in treasury as of June 30, 2017 and 3,921,718 shares as of December 31, 2016, most of which are related to shares of our common stock repurchased for the settlement of employee tax withholding obligations arising from the vesting of restricted stock.

Share Repurchase Program

In the fourth quarter of 2014, our board of directors authorized the repurchase of up to $500 million of our outstanding common stock and in the first quarter of 2016, our board of directors authorized the repurchase of an additional $370 million of our

outstanding common stock under our share repurchase program.

These purchases may be made from time to time at prevailing market prices in open market purchases, privately-negotiated transactions, block purchase techniques or otherwise, as determined by our management. The purchases are primarily funded from existing cash balances. The share repurchase program may be suspended, modified or discontinued at any time.

There were no shares repurchased during the second quarter of 2017.

The following table summarizes our share repurchase activity:



	Six Months Ended June 30,
	2017		2016
Number of shares of common stock repurchased	2,215,755		746,840
Average price paid per share	$	70.64	$	60.37
Total purchase price (in millions)	$	156	$	45

As discussed above in “Common Stock in Treasury, at Cost,” shares repurchased under our share repurchase program are currently retired and cancelled. As of June 30, 2017, the remaining amount authorized for share repurchases under the program was $273 million.

Other Repurchases of Common Stock

During the first six months of 2017, we repurchased 710,892 shares of our common stock in settlement of employee tax withholding obligations arising from the vesting of restricted stock.

Preferred Stock

Our certificate of incorporation authorizes the issuance of 30,000,000 shares of preferred stock, par value $0.01 per share, issuable from time to time in one or more series. At June 30, 2017 and December 31, 2016, no shares of preferred stock were issued or outstanding.

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Cash Dividends on Common Stock

During the six months ended June 30, 2017, our board of directors declared the following cash dividends:



Declaration Date	Dividend Per Common Share		Record Date	Total Amount Paid		Payment Date
				(in millions)
January 30, 2017	$	0.32	March 17, 2017	$	53	March 31, 2017
April 25, 2017	0.38		June 16, 2017	63		June 30, 2017
				$	116

The total amount paid of $116 million was recorded in retained earnings in the Condensed Consolidated Balance Sheets at June 30, 2017.

In July 2017, the board of directors declared a regular quarterly cash dividend of $0.38 per share on our outstanding common stock. The dividend is payable on September 29, 2017 to shareholders of record at the close of business on September 15, 2017. The estimated amount of this dividend is $63 million. In April 2017, the board of directors declared a regular quarterly cash dividend of $0.38 per share on our outstanding common stock which reflects a 19.0% increase from our prior quarterly cash dividend of $0.32. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the board of directors.

In April 2017, our board of directors adopted a dividend policy with the intention to provide shareholders with regular and growing dividends over the long term as earnings and cash flow grow.

12. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(in millions, except share and per share amounts)
Numerator:
Net income attributable to common shareholders	$	147	$	70	$	317	$	202
Denominator:
Weighted-average common shares outstanding for basic earnings per share	165,415,989		165,018,990		165,941,611		164,650,341
Weighted-average effect of dilutive securities:
Employee equity awards	3,072,316		3,186,818		3,410,429		3,582,688
Weighted-average common shares outstanding for diluted earnings per share	168,488,305		168,205,808		169,352,040		168,233,029
Basic and diluted earnings per share:
Basic earnings per share	$	0.89	$	0.42	$	1.91	$	1.23
Diluted earnings per share	$	0.87	$	0.42	$	1.87	$	1.20

Stock options to purchase 640,449 shares of common stock and 4,108,802 shares of restricted stock and PSUs were outstanding at June 30, 2017. For the three months ended June 30, 2017, we included 371,632 of the outstanding stock options and 3,829,256 shares of restricted stock and PSUs in the computation of diluted earnings per share, on a weighted-average basis, as their inclusion was dilutive. For the six months ended June 30, 2017, we included 371,632 of the outstanding stock options and 3,474,721 shares of restricted stock and PSUs in the computation of diluted earnings per share, on a weighted-average basis, as their inclusion was dilutive. The remaining

stock options, shares of restricted stock and PSUs are antidilutive, and as such, they were properly excluded.

Stock options to purchase 1,999,020 shares of common stock and 4,603,954 shares of restricted stock and PSUs were outstanding at June 30, 2016. For the three months ended June 30, 2016, we included all of the outstanding stock options and 4,229,100 shares of restricted stock and PSUs in the computation of diluted earnings per share, on a weighted-average basis, as their inclusion was dilutive. For the six months ended June 30, 2016, we included all of the outstanding stock

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options and 3,858,076 shares of restricted stock and PSUs in the computation of diluted earnings per share, on a weighted-average basis, as their inclusion was dilutive. The remaining shares of restricted stock and PSUs are antidilutive, and as such, they were properly excluded.

13. Fair Value of Financial Instruments

The following table presents our financial assets that are measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016. We did not have any financial liabilities measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016.



	June 30, 2017
	Total		Level 1		Level 2		Level 3
	(in millions)
Financial investments, at fair value	$	300	$	277	$	23	$	—
Default fund and margin deposit investments	1,991		1,488		503		—
Total	$	2,291	$	1,765	$	526	$	—



	December 31, 2016
	Total		Level 1		Level 2		Level 3
	(in millions)
Financial investments, at fair value	$	245	$	228	$	17	$	—
Default fund and margin deposit investments	1,900		1,763		137		—
Total	$	2,145	$	1,991	$	154	$	—

Our Level 1 financial investments, at fair value were primarily comprised of trading securities, mainly highly rated European government debt securities. Of these securities, $160 million as of June 30, 2017 and $172 million as of December 31, 2016 are assets utilized to meet regulatory capital requirements, primarily for our clearing operations at Nasdaq Clearing. Level 2 financial investments, at fair value were primarily comprised of available-for-sale investment securities in short-term certificates of deposit and commercial paper as of June 30, 2017 and were primarily comprised of available-for-sale investment securities in short-term commercial paper as of December 31, 2016.

Our default fund and margin deposit investments include cash contributions invested by Nasdaq Clearing, in accordance with its investment policy. Of the total balance of $3,671 million recorded in the Condensed Consolidated Balance Sheets as of June 30, 2017, $1,488 million of cash contributions have been invested in highly rated European, and to a lesser extent, U.S. government debt securities or central bank certificates and $503 million of cash contributions have been invested in reverse repurchase agreements. The remainder of this balance is held in cash. Of the total balance of $3,301 million recorded in the

Condensed Consolidated Balance Sheets as of December 31, 2016, $137 million of cash contributions have been invested in reverse repurchase agreements and $1,763 million of cash contributions have been invested in highly rated European, and to a lesser extent, U.S. government debt securities and central bank certificates. The remainder of this balance is held in cash. See Note 14, “Clearing Operations,” for further discussion of default fund contributions and margin deposits.

There were no transfers between Level 1 and Level 2 of the fair value hierarchy as of June 30, 2017 and December 31, 2016.

Financial Instruments Not Measured at Fair Value on a Recurring Basis

Some of our financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. Such financial assets and financial liabilities include: cash and cash equivalents, restricted cash, receivables, net, certain other current assets, accounts payable and accrued expenses, Section 31 fees payable to SEC, accrued personnel costs, commercial paper and certain other current liabilities.

In addition, our investments in OCC and EuroCCP N.V. are accounted for under the equity method of accounting and our investments in Borsa Istanbul and LCH.Clearnet Group Limited are carried at cost. See “Equity Method Investments,” and “Cost Method Investments,” of Note 6, “Investments,” for further discussion.

We also consider our debt obligations to be financial instruments. The fair value of our debt obligations, utilizing discounted cash flow analyses for our floating rate debt and prevailing market rates for our fixed rate debt, was $3.8 billion at both June 30, 2017 and December 31, 2016. The discounted cash flow analyses are based on borrowing rates currently available to us for debt with similar terms and maturities. The fair value of our commercial paper approximates the carrying value since the rates of interest on this short-term debt approximate market rates as of June 30, 2017. 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 8, “Debt Obligations.”

14. Clearing Operations

Nasdaq Clearing

Nasdaq Clearing is authorized and supervised under EMIR as a multi-asset clearinghouse by the SFSA and is authorized to conduct clearing operations in Norway by the Norwegian Ministry of Finance. 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, freight and fuel oil derivatives, iron ore 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

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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, clearing members’ open positions are aggregated to create a single portfolio for which default fund and margin collateral requirements are calculated. See “Default Fund Contributions and Margin Deposits” below for further discussion of Nasdaq Clearing’s default fund and margin requirements.

Nasdaq Clearing maintains four member sponsored default funds: one related to financial markets, one related to commodities markets, one related to the seafood market, and a mutualized fund. Under this structure, Nasdaq Clearing and its clearing members must contribute to the total regulatory capital related to the clearing operations of Nasdaq Clearing. This structure applies an initial separation of default fund contributions for the financial, commodities and seafood markets in order to create a buffer for each market’s counterparty risks. Simultaneously, a mutualized default fund provides capital efficiencies to Nasdaq Clearing’s members with regard to total regulatory capital required. See “Default Fund Contributions” below for further discussion of Nasdaq Clearing’s default fund. Power of assessment and a liability waterfall also have been implemented. See “Power of Assessment” and “Liability Waterfall” below for further discussion. These requirements ensure the alignment of risk between Nasdaq Clearing and its clearing members.

Default Fund Contributions and Margin Deposits

As of June 30, 2017, clearing member default fund contributions and margin deposits were as follows:



	June 30, 2017
	Cash Contributions		Non-Cash Contributions		Total Contributions
	(in millions)
Default fund contributions	$	334	$	127	$	461
Margin deposits	3,337		4,409		7,746
Total	$	3,671	$	4,536	$	8,207