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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2023
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: 001-38855
___________________________________
Nasdaq, Inc.
(Exact name of registrant as specified in its charter)
Delaware52-1165937
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
151 W. 42nd Street,New York,New York10036
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number, including area code: +1 212 401 8700
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareNDAQThe Nasdaq Stock Market
4.500% Senior Notes due 2032NDAQ32The Nasdaq Stock Market
0.900% Senior Notes due 2033NDAQ33The Nasdaq Stock Market
0.875% Senior Notes due 2030NDAQ30The Nasdaq Stock Market
1.75% Senior Notes due 2029NDAQ29The Nasdaq Stock Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
    Indicate by check mark 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 filerAccelerated filer
Non-accelerated filerSmaller 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No    
As of June 30, 2023, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $17.0 billion (this amount represents approximately 340.1 million shares of Nasdaq, Inc.’s common stock based on the last reported sales price of $49.85 of the common stock on The Nasdaq Stock Market on such date).
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding at February 13, 2024
Common Stock, $0.01 par value per share575,206,570 shares
Documents Incorporated by Reference: Certain portions of the Definitive Proxy Statement for the 2024 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.




  
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Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.

i


About this Form 10-K
Throughout this Form 10-K, unless otherwise specified:
“Nasdaq,” “we,” “us” and “our” refer to Nasdaq, Inc.
“Nasdaq Baltic” refers to collectively, Nasdaq Tallinn AS, Nasdaq Riga, AS, and AB Nasdaq Vilnius.
“Nasdaq BX” refers to the cash equity exchange operated by Nasdaq BX, Inc.
“Nasdaq BX Options” refers to the options exchange operated by Nasdaq BX, Inc.
“Nasdaq Clearing” refers to the clearing operations conducted by Nasdaq Clearing AB.
“Nasdaq CXC” and “Nasdaq CX2” refer to the Canadian cash equity trading books operated by Nasdaq CXC Limited.
“Nasdaq First North” refers to our alternative marketplaces for smaller companies and growth companies in the Nordic and Baltic regions.
“Nasdaq GEMX” refers to the options exchange operated by Nasdaq GEMX, LLC.
“Nasdaq ISE” refers to the options exchange operated by Nasdaq ISE, LLC. 
“Nasdaq MRX” refers to the options exchange operated by Nasdaq MRX, LLC. 
“Nasdaq Nordic” refers to collectively, Nasdaq Clearing AB, Nasdaq Stockholm AB, Nasdaq Copenhagen A/S, Nasdaq Helsinki Ltd, and Nasdaq Iceland hf.
“Nasdaq PHLX” refers to the options exchange operated by Nasdaq PHLX LLC.
“Nasdaq PSX” refers to the cash equity exchange operated by Nasdaq PHLX LLC.
“The Nasdaq Options Market” refers to the options exchange operated by The Nasdaq Stock Market LLC.
“The Nasdaq Stock Market” refers to the cash equity exchange and listing venue operated by The Nasdaq Stock Market LLC.
Nasdaq also provides as a tool for the reader the following list of abbreviations and acronyms that are used throughout this Annual Report on Form 10-K.
2022 Revolving Credit Facility: $1.25 billion senior unsecured revolving credit facility, which matures on December 16, 2027, which has replaced the $1.25 billion credit facility issued in 2020
2025 Notes: $500 million aggregate principal amount of 5.650% senior unsecured notes due June 28, 2025
2026 Notes: $500 million aggregate principal amount of 3.85% senior unsecured notes due June 30, 2026
2028 Notes: $1 billion aggregate principal amount of 5.350% senior unsecured notes due June 28, 2028
2029 Notes: €600 million aggregate principal amount of 1.75% senior unsecured notes due March 28, 2029
2030 Notes: €600 million aggregate principal amount of 0.875% senior unsecured notes due February 13, 2030
2031 Notes: $650 million aggregate principal amount of 1.650% senior unsecured notes due January 15, 2031
2032 Notes: €750 million aggregate principal amount of 4.500% senior unsecured notes due February 15, 2032
2033 Notes: €615 million aggregate principal amount of 0.900% senior unsecured notes due July 30, 2033
2034 Notes: $1.25 billion aggregate principal amount of 5.550% senior unsecured notes due February 15, 2034
2040 Notes: $650 million aggregate principal amount of 2.500% senior unsecured notes due December 21, 2040
2050 Notes: $500 million aggregate principal amount of 3.25% senior unsecured notes due April 28, 2050
2052 Notes: $550 million aggregate principal amount of 3.950% senior unsecured notes due March 7, 2052
2053 Notes: $750 million aggregate principal amount of 5.950% senior unsecured notes due August 15, 2053
2063 Notes: $750 million aggregate principal amount of 6.100% senior unsecured notes due June 28, 2063
AML: Anti-money Laundering
ARR: Annualized Recurring Revenue
ASC: Accounting Standards Codification
ASU: Accounting Standards Update
ASR: Accelerated Share Repurchase
ATS: Alternative Trading System
AUM: Assets Under Management
AWS: Amazon Web Services
CAT: A market-wide consolidated audit trail established under an SEC approved plan by Nasdaq and other exchanges
CCP: Central Counterparty
CFTC: U.S. Commodity Futures Trading Commission
EBITDA: Earnings before interest, taxes, depreciation and amortization
EMIR: European Market Infrastructure Regulation
Equity Plan: Nasdaq Equity Incentive Plan
ESG: Environmental, Social and Governance
ESPP: Nasdaq Employee Stock Purchase Plan
ETF: Exchange Traded Fund
ETP: Exchange Traded Product
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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
GICS: Global Industry Classification Standard
IPO: Initial Public Offering
MiFID II: Update to the Markets in Financial Instruments Directive
MiFIR: Markets in Financial Instruments Regulation
NPM: The NASDAQ Private Market, LLC
NSCC: National Securities Clearing Corporation
OCC: The Options Clearing Corporation
OTC: Over-the-Counter
Proxy Statement: Nasdaq’s Definitive Proxy Statement for the 2024 Annual Meeting of Shareholders
PSU: Performance Share Unit
Regulation NMS: Regulation National Market System
Regulation SCI: Regulation Systems Compliance and Integrity
SaaS: Software as a Service
SEC: U.S. Securities and Exchange Commission
SERP: Supplemental Executive Retirement Plan
SFSA: Swedish Financial Supervisory Authority
SOFR: Secured Overnight Financing Rate
S&P: Standard & Poor’s
S&P 500: S&P 500 Stock Index
SPAC: Special Purpose Acquisition Company
SRO: Self-regulatory Organization
SSMA: Swedish Securities Markets Act 2007:528
TSR: Total Shareholder Return
U.S. GAAP: U.S. Generally Accepted Accounting Principles
U.S. Tape plans: U.S. cash equity and U.S. options industry data
UTP: Unlisted Trading Privileges
UTP Plan: Joint SRO Plan Governing the Collection, Consolidation, and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on a UTP Basis
NASDAQ, the NASDAQ logos, and other brand, service or product names or marks referred to in this report are trademarks or service marks, registered or otherwise, of Nasdaq, Inc. and/or its subsidiaries. FINRA and Trade Reporting Facility are registered trademarks of FINRA.
This Annual Report on Form 10-K includes market share and industry data that we obtained from industry publications and surveys, reports of governmental agencies and internal company surveys. Industry publications and surveys generally state that the information they contain has been obtained from sources believed to be reliable, but we cannot assure you that this information is accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on the most currently available market data. For market comparison purposes, The Nasdaq Stock Market data in this Annual Report on Form 10-K for IPOs and new listings of equity securities (including issuers that switched from other listings venues, closed-end funds and ETPs) is based on data generated internally by us; therefore, the data may not be comparable to other publicly-available IPO data. Data in this Annual Report on Form 10-K for IPOs and new listings of equity securities on the Nasdaq Nordic and Nasdaq Baltic exchanges and Nasdaq First North also is based on data generated internally by us. IPOs and new listings data is presented as of period end. While we are not aware of any misstatements regarding industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed in the “Item 1A. Risk Factors” section in this Annual Report on Form 10-K. 
Nasdaq intends to use its website, ir.nasdaq.com, as a means for disclosing material non-public information and for complying with SEC Regulation FD and other disclosure obligations.
iii


Forward-Looking Statements
The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Annual Report on Form 10-K contains these types of statements. Words such as “may,” “will,” “could,” “should,” “anticipates,” “envisions,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words or terms of similar substance used in connection with any discussion of future expectations as to industry and regulatory developments or business initiatives and strategies, future operating results or financial performance, and other future developments are intended to identify forward-looking statements. These include, among others, statements relating to:
our strategic direction, including changes to our corporate structure;
the integration of acquired businesses, including accounting decisions relating thereto;
the scope, nature or impact of acquisitions, divestitures, investments, joint ventures or other transactional activities;
the effective dates for, and expected benefits of, ongoing initiatives, including transactional activities and other strategic, restructuring, technology, ESG, de-leveraging and capital return initiatives;
our products and services;
the impact of pricing changes;
tax matters;
the cost and availability of liquidity and capital; and
any litigation, or any regulatory or government investigation or action, to which we are or could become a party or which may affect us and any potential settlements of litigation, regulatory or governmental investigations or actions, including with respect to our CFTC investigation.
Forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others, the following:
our operating results may be lower than expected;
our ability to successfully integrate acquired businesses or divest sold businesses or assets, including the fact that any integration or transition may be more difficult, time consuming or costly than expected, and we may be unable to realize synergies from business combinations, acquisitions, divestitures or other transactional activities;
loss of significant trading and clearing volumes or values, fees, market share, listed companies, market data customers or other customers;
our ability to develop and grow our non-trading businesses;
our ability to keep up with rapid technological advances, including our ability to effectively manage the development and use of artificial intelligence in certain of our products and offerings, and adequately address cybersecurity risks;
economic, political and market conditions and fluctuations, including inflation, interest rate and foreign currency risk inherent in U.S. and international operations, and geopolitical instability;
the performance and reliability of our technology and technology of third parties on which we rely;
any significant systems failures or errors in our operational processes;
our ability to continue to generate cash and manage our indebtedness; and
adverse changes that may occur in the litigation or regulatory areas, or in the securities markets generally, or increased regulatory oversight domestically or internationally.
Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the uncertainty and any risk related to forward-looking statements that we make. These risk factors are discussed under the caption "Item 1A. Risk Factors" in this Annual Report on Form 10-K. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. You should carefully read this entire Annual Report on Form 10-K, including “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes. Except as required by the federal securities laws, we undertake no obligation to update any forward-looking statement, release publicly any revisions to any forward-looking statements or report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
iv


PART I
Item 1. Business
Overview
Nasdaq is a global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence.
We manage, operate and provide our products and services in three business segments: Capital Access Platforms, Financial Technology and Market Services.
History
Nasdaq was founded in 1971 as a wholly-owned subsidiary of FINRA. Beginning in 2000, FINRA restructured and broadened ownership in Nasdaq by selling shares to FINRA members, investment companies and issuers listed on The Nasdaq Stock Market. In connection with this restructuring, FINRA fully divested its ownership of Nasdaq in 2006, and The Nasdaq Stock Market became an independent registered national securities exchange in 2007.
In February 2008, Nasdaq and OMX AB combined their businesses, and we changed our corporate name to The NASDAQ OMX Group, Inc. This transformational combination resulted in the expansion of our business from a U.S.-based exchange operator to a global exchange company offering technology that powers our own exchanges and markets as well as many other marketplaces around the world. We operated as the NASDAQ OMX Group until we rebranded our business as Nasdaq, Inc. in 2015.
In November 2023, Nasdaq completed its acquisition of Adenza. Through its two solutions, AxiomSL and Calypso, Adenza is a provider of mission-critical risk management, regulatory reporting, and capital markets software to the financial services industry. The acquisition enhances our technology solutions and further expands Nasdaq’s complementary offerings across mission-critical capital markets infrastructure and compliance.
Growth Strategy
To enable success in the evolving global financial system, we have established our purpose, vision, and value proposition together with a focused growth strategy:
Our Purpose: We advance economic progress for all.
Our Vision: We will be the trusted fabric of the world’s financial system.
Our Value Proposition: We deliver world-leading platforms that improve the liquidity, transparency and integrity of the global economy.
Our Strategy: In 2017, we set a new strategic direction focused on maximizing the resources, people and capital allocated to our largest growth opportunities. These opportunities, which include anti-financial crime and compliance solutions, marketplace technology, workflow for investment managers and asset owners as well as insight solutions, constituted large and growing opportunities where we felt our strengths in technology, proprietary data, analytics and capital markets expertise, combined with our expansive client network, positioned us to meet our clients’ evolving needs.
Following the completion of the Adenza acquisition, including its two flagship solutions, AxiomSL and Calypso, we further aligned our business more closely with the foundational shifts that are driving the evolution of the global financial system. The divisional structure is as follows:
https://cdn.kscope.io/ec871d4f63292ef8a2cfed4b8ea8a703-SegmentReclassification9.jpg
By aligning our business segments against these secular trends, we aim to deliver more for our clients and increase growth across our key pillars of liquidity, transparency and integrity:
Liquidity: Within our Financial Technology and Market Services segments, we continue to modernize markets by utilizing technology to maximize the liquidity of the global economy. New technologies, including cloud, blockchain, machine learning and artificial intelligence, present significant opportunities to further enhance market resiliency and scalability and make markets even more accessible. We believe that these technologies will enable more opportunities for market participants and new asset classes to be integrated across markets globally. The Financial Technology and Market Services segments together offer complementary capabilities to capture the potential these technologies can unlock in our industry. By utilizing our Market Services segment’s position at the center of markets, we believe that our Financial Technology segment will be at the forefront of the financial system’s evolution and will play a critical role in advancing the modernization of markets across geographies and asset classes.
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Transparency: Our Capital Access Platforms segment is uniquely placed to help clients navigate the increasing complexity of the evolving financial system through access to capital and transparency which enables economic growth. With approximately 10,000 corporate clients and 5,000 clients across the investment management ecosystem, Nasdaq is a trusted partner to aid the corporate and investment communities in making more informed decisions. Leveraging the insights and capabilities across our listings, advisory, data, index, and analytics teams, we believe that Capital Access Platforms serves as a bridge between the investor and corporate communities, focused on enhancing the client experience by providing efficient routes to capital, delivering more holistic, actionable insights and intelligence, modernizing workflows, and navigating the climate and ESG landscape.
Integrity: Financial Crime Management Technology and Regulatory Technology include Nasdaq’s fraud detection, anti-money laundering, surveillance and risk data management and regulatory reporting solutions businesses. These businesses remain focused on capturing the growth associated with protecting the integrity of the financial system by fighting financial crime and helping our clients with their most significant compliance challenges. These businesses will continue delivering world-class solutions, leveraging the power of the cloud and machine learning across asset classes, to the full spectrum of banks and brokers, including the emerging ecosystem of financial technology, or FinTech, companies and digital banks.
Products and Services
Capital Access Platforms
Our Capital Access Platforms segment delivers liquidity, transparency and integrity to the corporate issuer and investment community by empowering our clients to effectively navigate the capital markets, achieve their sustainability goals, and drive governance excellence. We offer a suite of products to assist companies in managing corporate governance standards.
Our Capital Access Platforms segment includes Data & Listing Services, Index and Workflow & Insights.
Data & Listing Services
Our North American and European data products enhance transparency of market activity within our exchanges and provide critical information to professional and non-professional investors globally. Our Data business distributes historical and real-time market data to sell-side customers, the institutional investing community, retail online brokers, proprietary trading firms, and other venues, as well as internet portals and data distributors.
We collect, process, and create information and earn revenues as a distributor of our own, as well as select third-party, content. We provide varying levels of quote and trade information to market participants and to data distributors who in turn provide subscriptions for this information. Our systems enable distributors to gain access to our market depth, fund valuation, order imbalances, market sentiment and other analytical data.
We distribute this proprietary market information to both market participants and non-participants through a number of proprietary products, including Nasdaq TotalView, our flagship market depth quote product. We offer TotalView products for The Nasdaq Stock Market and our Nasdaq BX, Nasdaq PSX and Nordic markets. We also offer Nordic Equity TotalView, Nordic Derivatives TotalView and Nordic Fixed Income TotalView for Nordic markets.
We operate several other proprietary services and data products to provide market information, including Nasdaq Basic, a low cost alternative to the industry Level 1 feed and Nasdaq Canada Basic, a low cost alternative to other high priced data feeds. We also provide various other data, including data relating to our U.S. equities and options exchanges and Nordic equities, derivatives, fixed income and futures.
Additionally, our Nasdaq Cloud Data Service provides a flexible and efficient method of delivery for real-time exchange data and other financial information. Data is made available through a suite of application programming interfaces, or APIs, allowing for the integration of data from disparate sources and a reduction in time to market for customer-designed applications. These APIs are highly scalable and can support the delivery of real-time exchange data.
We operate a variety of listing platforms around the world to provide multiple global capital raising solutions for public companies. Companies listed on our markets represent a diverse array of industries including, among others, healthcare, consumer products, telecommunication services, information technology, financial services, industrials and energy. Our main listing markets are The Nasdaq Stock Market and the Nasdaq Nordic and Nasdaq Baltic exchanges.
Companies seeking to list securities on The Nasdaq Stock Market may do so on one of the three market tiers: The Nasdaq Global Select Market, The Nasdaq Global Market, or The Nasdaq Capital Market. To qualify, companies must meet minimum listing requirements, including specified financial and corporate governance criteria. Once listed, companies must maintain rigorous listing and corporate governance standards.
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As of December 31, 2023, a total of 5,262 companies listed securities on our U.S., Nasdaq Nordic, Nasdaq Baltic and Nasdaq First North exchanges. As of December 31, 2023, a total of 4,044 companies listed securities on The Nasdaq Stock Market, with 1,443 listings on The Nasdaq Global Select Market, 1,269 on The Nasdaq Global Market and 1,332 on The Nasdaq Capital Market.
We seek new listings from companies conducting IPOs, including SPACs, and direct listings as well as companies looking to switch from alternative exchanges. The 2023 new listings were comprised of the following:
Operating company IPOs
103
SPAC IPOs
27
Switches from the New York Stock Exchange LLC, or NYSE, and the NYSE American LLC, or NYSE American18
Upgrades from OTC18
ETPs and Other Listings164
Total
330
The Nasdaq Stock Market IPO win rates:
2023 total
82 %
Operating companies81 %
During 2023, we had 18 new listings resulting from companies switching their listings from NYSE or NYSE American to join The Nasdaq Stock Market. Together with companies that transferred additional securities to The Nasdaq Stock Market during 2023, an aggregate of $377 billion in global equity market capitalization switched to The Nasdaq Stock Market.
We also offer listings on the exchanges that comprise Nasdaq Nordic and Nasdaq Baltic. For smaller companies and growth companies, we offer access to the financial markets through the Nasdaq First North alternative marketplaces. As of December 31, 2023, a total of 1,218 companies listed securities on our Nordic and Baltic exchanges.
Our European listing customers include companies, funds and governments. Customers issue securities in the form of cash equities, depository receipts, warrants, ETPs, convertibles, rights, options, bonds or fixed-income related products. In 2023, a total of 23 new companies listed on our Nordic and Baltic exchanges.
Index
Our Index business develops and licenses Nasdaq-branded indices and financial products. License fees for our trademark licenses vary by product based on a percentage of underlying assets, dollar value of a product issuance, number of products or number of contracts traded. We also license cash-settled options, futures and options on futures on our indices.
As of December 31, 2023, 388 ETPs listed on 27 exchanges in over 20 countries tracked a Nasdaq index and accounted for $473 billion in AUM. Our flagship index, the Nasdaq-100 Index, or NDX, includes the top 100 non-financial companies
listed on The Nasdaq Stock Market. More than 100 ETPs worldwide track indices in the NDX ecosystem, and had nearly $360 billion in assets tracking the index as of December 31, 2023.
We provide index data products based on Nasdaq indices. Index data products include our Global Index Data Service, which delivers real-time index values throughout the trading day, and Global Index Watch/Global Index File Delivery Service, which delivers daily and historical weightings and components data, corporate actions and a breadth of additional data for the indices that we operate.
Workflow & Insights
Workflow & Insights includes our analytics and corporate solutions products.
Our analytics products provide asset managers, investment consultants and institutional asset owners with information and analytics to make data-driven investment decisions, deploy their resources more productively, and provide liquidity solutions for private funds. Through our eVestment and Solovis solutions, we provide a suite of cloud-based solutions that help institutional investors and consultants conduct pre-investment due diligence, and monitor their portfolios post-investment. The eVestment platform also enables asset managers to efficiently distribute information about their firms and funds to asset owners and consultants worldwide.
Through the Solovis platform, endowments, foundations, pensions and family offices transform how they collect and aggregate investment data, analyze portfolio performance, model and predict future outcomes, and share meaningful portfolio insights with key stakeholders. The Nasdaq Fund Network and Nasdaq Data Link are additional platforms in our suite of investment data analytics offerings and data management tools. Nasdaq Fund Network gathers and distributes daily net asset values from over 44,000 funds and other investment vehicles across North America. We have extended Nasdaq Fund Network to support the distribution of collective investment trusts, hedge funds, managed accounts, separate accounts, 529 educational saving plans and demand deposit accounts. Nasdaq Data Link strengthens our position as a leading source for financial, economic, and alternative datasets. For investment management firms, investment banks and other investors, the platform powers data-driven decision-making for users across the globe via universal APIs, and provides for efficient data discovery and delivery.
Corporate solutions serves both public and private companies and organizations through our Investor Relations Intelligence, Governance Solutions and ESG Solutions products. Our public company clients can be companies listed on our exchanges or other U.S. and global exchanges. Our private company clients include a diverse group of organizations ranging from family-owned companies, government organizations, law firms, privately held entities, and various non-profit organizations to hospitals and healthcare systems. We help organizations enhance their
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ability to understand and expand their global shareholder base, improve corporate governance, and navigate the evolving ESG landscape through our suite of advanced technology, analytics, and consulting services. We also advise clients on a range of governance and sustainability-related issues.
Our Investor Relations Intelligence offerings include a global team of expert consultants that deliver advisory services including Equity Surveillance & Shareholder Analysis, Investor Engagement and Perception Studies, as well as an industry-leading platform, Nasdaq IR Insight®, to investor relations professionals and executive teams. These solutions allow investor relations officers and executives to better manage their investor relations programs, understand their investor base, target new investors, manage meetings and consume key data such as investor profiles, equity research, consensus estimates and news.
Through our Governance Solutions products, we provide a global technology offering and consulting services that streamline the meeting process for board of directors and executive leadership teams and enable them to accelerate decision making and strengthen governance. Our solutions help protect sensitive data and facilitate productive collaboration, which enables board members and teams to work faster and more effectively.
Our ESG Solutions includes our ESG Advisory practice and our ESG software offering. Our ESG Advisory practice helps companies analyze, assess and action best practices to attract long-term capital. In June 2022, we acquired Metrio, a provider of ESG data collection, analytics and reporting services. Metrio software is a cloud-based solution that helps firms manage ESG data, perform greenhouse gas emissions calculations and accounting, and optimize granular data collection, report publication and dashboarding against targets. In September 2023, we announced the launch of Nasdaq Metrio, which integrates Nasdaq OneReport and Metrio legacy technologies into a new SaaS-based, end-to-end sustainability platform. The new platform enables corporates to collect, measure, disclose and communicate investor-grade, audited ESG data efficiently across dozens of raters, rankers and framework organizations to drive strategic outcomes and attract investors. The platform also features a new Carbon Accounting and Management product for companies looking to focus on their scope 1, 2 and 3 emissions. We continue to launch new ESG solutions as discussed further in “Environmental, Social and Governance Matters” below.
Financial Technology
The Financial Technology segment delivers world leading platforms that improve the liquidity, transparency and integrity of the global economy by architecting and operating the world’s best markets. This segment comprises Financial Crime Management Technology, Regulatory Technology and Capital Markets Technology solutions.
We are a leading global technology solutions provider and partner to exchanges, clearing organizations, central securities depositories, regulators, banks, brokers, buy-side firms and corporate businesses, and power more than 130 marketplaces in more than 55 countries. Our solutions can handle a wide array of assets, including but not limited to cash equities, equity derivatives, currencies, various interest-bearing securities, commodities, energy products and digital currencies. Our solutions can also be used in the creation of new asset classes by non-capital markets customers, as discussed further below.
Financial Crime Management Technology
Our Financial Crime Management Technology business includes our Verafin solution which delivers a leading platform that improves the integrity and transparency of the financial world by providing SaaS solutions for fraud detection and AML.
The financial services industry has seen a growing demand for products and services focused on anti-financial crime. Our Verafin solution provides a cloud-based platform to help detect, investigate, and report money laundering and financial fraud to approximately 2,500 financial institutions in North America.
Regulatory Technology
Regulatory Technology includes surveillance and AxiomSL solutions.
Our surveillance solutions include a SaaS platform designed for banks, brokers and other market participants to assist in complying with market rules, regulations and internal market surveillance policies and serves more than 170 clients. We also provide a solution to regulators and exchanges with a robust platform to manage cross-market, cross-asset and multi-venue surveillance. This offering powers surveillance for more than 50 exchanges and 18 regulators.
AxiomSL is a global leader in risk data management and regulatory reporting solutions for the financial industry, including banks, broker dealers and asset managers. Its unique enterprise data management platform delivers data lineage, risk aggregation, analytics, workflow automation, reconciliation, validation and audit functionality, as well as disclosures. AxiomSL’s platform supports compliance across a wide range of global and local regulations.
Capital Markets Technology
Capital Markets Technology includes market technology, trade management services and Calypso.
Our market technology solutions can handle a wide array of assets, including but not limited to cash equities, equity derivatives, currencies, various interest-bearing securities, commodities, energy products and digital currencies. Our solutions can also be used in the creation of new asset classes by non-capital markets customers, as discussed further below.
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Nasdaq’s market technology is utilized by leading markets in North America, Europe and Asia as well as emerging markets in the Middle East, Latin America, and Africa.
We continue to build out our SaaS business portfolio by extending and migrating our current offerings to SaaS. Our market technology business has evolved from its origins serving the capital markets, as we leverage our flexible and modular architecture technology that provides next generation capital markets capabilities in an open and agile environment, to develop our SaaS platform and offerings. We expect to continue to expand adoption of this SaaS model by our clients in the future.
For market infrastructure operators, which include exchanges, regulators, clearinghouses and central securities depositories, we provide and deliver mission-critical solutions across the trade lifecycle, which is designed to cover all aspects of a market operator’s needs, from trading and clearing to risk management, market surveillance, index development, data, management, testing and quality assurance.
In addition to serving the market operators in the core capital markets, there is a demand for mission critical solutions to enable robust operation of new emerging asset classes such as crypto currencies and native digital markets. Our market technology business currently offers its services to several digital assets exchanges, and the SaaS-based Marketplace Services Platform provides next-generation marketplace capabilities spanning the transaction lifecycle to facilitate the exchange of assets, services and information across various types of market ecosystems and machine-to-machine transactions. The Marketplace Services Platform is targeted at new emerging digital markets and enables end-to-end marketplace implementation without the resources required for on-premise solutions.
Numerous market technology projects involve complex delivery management and systems integration. Through our integration services, we can assume responsibility for projects that involve migration to a new system and the establishment of entirely new marketplaces. We also offer operation and support for the applications, systems platforms, networks and other components included in an information technology solution, as well as advisory services. Our ongoing migration to the cloud, discussed below, created a blueprint for our Marketplace Technology clients that will be used to demonstrate, guide and migrate their markets to the cloud, as well as for our own future market migrations.
Our trade management services provide market participants with a wide variety of alternatives for connecting to and accessing our markets for a fee. Our marketplaces may be accessed via a number of different protocols used for quoting, order entry, trade reporting and connectivity to various data feeds. WorkX, a web-based, front-end interface allows market participants to view data, utilize risk management tools, and submit and review trade reports. WorkX enables a seamless workflow and enhanced trade intelligence. In addition, we offer a variety of add-on compliance tools to help market participants comply with regulatory requirements.
We provide colocation services to market participants, whereby we offer firms cabinet space and power to house their own equipment and servers within our data centers. Additionally, we offer a number of wireless connectivity offerings between certain data centers using millimeter wave and microwave technology.
We completed the previously announced wind-down of our broker services operations business in 2022. This business primarily offered technology and customized securities administration solutions to financial participants in the Nordic market. Such services and solutions primarily consisted of flexible back-office systems, which allowed customers to efficiently manage safekeeping, settlement and corporate actions and reporting, and included connectivity to exchanges and central securities depositories.
Calypso is a leading provider of front-to-back trading technology solutions for the financial markets. The Calypso platform provides customers with a single platform designed to enable consolidation, innovation and growth. The platform supports front, middle and back office activities in exchange-traded and OTC instruments and supports multiple financial asset classes and the associated financial instruments. Calypso’s software application specializes in capital markets, investment management, risk management, clearing, collateral, treasury and liquidity management.
Market Services
Our Market Services segment includes our equity derivative trading and clearing, cash equity trading, fixed income, currency and commodities trading. We operate 19 exchanges across several asset classes, including derivatives, commodities, cash equity, debt, structured products and ETPs.
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We provide trading services in North America and Europe. In the U.S., we operate six options exchanges: Nasdaq PHLX, The Nasdaq Options Market, Nasdaq BX Options, Nasdaq ISE, Nasdaq GEMX and Nasdaq MRX. These exchanges facilitate the trading of equity, ETF, index and foreign currency options. Our combined options market share in 2023 represented the largest share of the U.S. market for multi-listed equity options. Our options trading platforms provide trading opportunities to retail investors, algorithmic trading firms and market makers, who tend to prefer electronic trading, and institutional investors, who typically require high touch services to execute their trades, which are often performed on our trading floor in Philadelphia.
We also operate three cash equity exchanges: The Nasdaq Stock Market, Nasdaq BX and Nasdaq PSX. Our U.S. cash equity exchanges offer trading of both Nasdaq-listed and non-Nasdaq-listed securities. The Nasdaq Stock Market is the largest single venue of liquidity for trading U.S.-listed cash equities. Market participants include market makers, broker-dealers, ATSs, institutional investors, and registered securities exchanges. We also operate a U.S. corporate bond exchange for the listing of corporate bonds.
Market Services also includes revenues from U.S. Tape plans. The plan administrators sell quotation and last sale information for all transactions, whether traded on The Nasdaq Stock Market or other exchanges, to market participants and to data distributors, who then provide the information to subscribers. After deducting costs, the plan administrators distribute the tape revenues to the respective plan participants based on a formula required by Regulation NMS that takes into account both trading and quoting activity.
In Canada, we operate an exchange with three independent markets for the trading of Canadian-listed securities: Nasdaq Canada CXC, Nasdaq Canada CX2 and Nasdaq Canada CXD.
In Europe, we operate exchanges in Tallinn (Estonia), Riga (Latvia) and Vilnius (Lithuania) as Nasdaq Baltic and exchanges in Stockholm (Sweden), Copenhagen (Denmark), Helsinki (Finland), and Reykjavik (Iceland) together with the clearing operations of Nasdaq Clearing, as Nasdaq Nordic.
Collectively, the Nasdaq Nordic and Nasdaq Baltic exchanges offer trading in cash equities, depository receipts, warrants, convertibles, rights, fund units and ETFs, as well as trading and clearing of derivatives and clearing of resale and repurchase agreements. Our platform allows the exchanges to share the same trading system, which enables efficient cross-border trading and settlement, cross-exchange membership and a single source for Nordic data products. Settlement and registration of cash equity trading takes place in Sweden, Finland, and Denmark via the local central securities depositories. In addition, Nasdaq owns a central securities depository that provides notary, settlement, central maintenance and other services in the Baltic countries and Iceland.
In Europe, Nasdaq Nordic offers trading in derivatives, such as stock options and futures and index options and futures. Nasdaq Clearing offers central counterparty clearing services for stock options and futures and index options and futures.
Nasdaq Fixed Income, or NFI, provides a wide range of products and services, such as trading and clearing, for fixed income products in Sweden, Denmark, Finland, Iceland, Estonia, Lithuania and Latvia. Nasdaq is the largest bond listing venue in the Nordics, with more than 5,600 listed retail and institutional bonds. In addition, Nasdaq Nordic facilitates the trading and clearing of Nordic fixed income derivatives in a unique market structure. Buyers and sellers agree to trades in fixed income derivatives through bilateral negotiations and then report those trades to Nasdaq Clearing. Nasdaq Clearing offers central counterparty clearing services for fixed-income options and futures and interest rate swaps. Nasdaq Clearing also operates a clearing service for the resale and repurchase agreement market.
Nasdaq Commodities is the brand name for Nasdaq’s European commodity-related products and services such as trading and clearing. Nasdaq Commodities’ offerings include derivatives in power, natural gas and carbon emission markets, seafood and electricity certificates. These products are listed on Nasdaq Oslo ASA, except for seafood, which is listed on Fish Pool, a third-party platform. In June 2023, we entered into an agreement to sell our European energy trading and clearing business, subject to regulatory approval.
Nasdaq Oslo ASA is the commodity derivatives exchange for European products. All trades with Nasdaq Oslo ASA are subject to clearing with Nasdaq Clearing, which offers central counterparty clearing services for commodities options and futures.
We also own a majority stake in Puro.earth, a Finnish-based leading platform for carbon removal. Puro.earth offers engineered carbon removal instruments that are verified and tradable through an open, online platform. Puro.earth’s marketplace capabilities add to our suite of ESG-focused technologies and workflow solutions and give our clients further resources to achieve their ESG objectives.
Enablers, Differentiators and Competition
Technology
Technology plays a key role in ensuring the growth, reliability and regulation of financial markets. We have established a technology risk program to evaluate the resiliency of critical systems, including risks associated with cybersecurity. This program is focused on identifying areas for improvement in systems, and implementing changes and upgrades to technology and processes to minimize future risk. We have continued our focus on improving the security of our technology with an emphasis on employee awareness through training, targeted phishing education campaigns, and new tool deployment for our securities operations team. See “Item 1A. Risk Factors,” in this Annual Report on Form 10-K for further discussion.
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We are focused on amplifying the impact that artificial intelligence, or AI, has on the business and in our products. We continue to develop products and services using AI, including generative AI, and the use of AI in product development is a priority for us in 2024. We are currently leveraging AI to further develop products and solutions in investment analytics, investor relations and fraud and anti-money laundering, as well as to modernize markets with the SEC approval of the first AI-powered order type. For example, we are working on developing AI systems to track financial transactions across the ecosystem to determine potential fraud, money laundering, or other actions. These solutions can be utilized by our clients, including banks, other exchanges and brokers firms that use our solutions to reduce or eliminate threats.
We are committed to the ethical and responsible use of AI in our products, services and business operations. Our AI governance structure aligns the application of AI with our core values through a framework that addresses the new and unique risks that AI technology presents, while enabling us to explore innovation and take advantage of opportunities that AI presents to better serve our customers, advance our business objectives and bring value to our shareholders. Our AI governance framework applies risk management across AI-related product development and business usage in the company through a multi-disciplinary approach. The framework puts into practice Nasdaq’s responsible AI usage principles and considers the U.S. National Institute of Standards and Technology AI Risk Management Framework. It is administered through company-wide policies, procedures and supporting preventative and detective controls.
We believe that our focus on AI to enhance features of our existing offerings and in the development of new solutions, together with our significant proprietary data sets, provides us with a competitive advantage.
During 2023, Nasdaq continued its shift to utilizing and deploying cloud infrastructure. We also migrated two additional exchanges to the cloud, in addition to the options exchange that we migrated in 2022. We believe that migrating our exchanges to the cloud, through our partnership with AWS will result in improved performance and increased flexibility for our customers. We expect to move additional North American markets to the cloud with AWS during the next several years. The shift to cloud-based markets will enable Nasdaq to provide its clients access to cloud-based capabilities, including virtual connectivity services, market analytics and machine learning, at a lower cost. We also expect to leverage the cloud-based infrastructure for our market technology clients, assisting such clients in developing their own platforms and customizing their offerings for their local, rapidly changing industry dynamics. Additionally, we expanded our existing colocation facility to meet the growing demand of market participants that seek proximity to the Nasdaq trading systems. Our expanded and enhanced facility is designed to provide the optimal environment for the next generation of
compute workloads and offer clients access to a wider range of services and capabilities.
To facilitate the exchange migration to AWS, Nasdaq will also leverage its Fusion technology platform. Fusion positions Nasdaq’s North American and European markets to manage, operate and deploy a common platform that can be used across our nine Nasdaq derivative markets, while enabling our markets for cloud deployment.
Competitive Strengths
We are a global, client-focused technology company with expertise in markets and financial technology. We deploy robust technology capabilities and have developed innovative solutions to further address client needs across the financial ecosystem. Our business segments complement each other and we believe that our strong competitive position in large, high-growth markets positions us for sustained growth.
A Unique Value Proposition
We operate leading platforms that can improve the liquidity, transparency, and integrity of the global financial ecosystem, allowing us to:
Develop efficient and reliable technologies to facilitate and protect the financial system across asset classes;
Empower our clients to effectively navigate the capital markets, achieve their sustainability goals, and maintain corporate governance excellence; and
Provide data, tools and insights that drive sound decision making while complying with evolving regulatory requirements.
Technological Strength
The strength and resiliency of our technology, enhanced by our new Financial Technology division, in meeting the advancing demands of our global customer base is vital to the continued success of our business and distinguishes us from our competitors.
We strive to be a trusted partner to a diverse range of clients that participate across the global financial ecosystem, including:
Banks and Financial Institutions - Providing safety and integrity through a suite of trade surveillance, cloud-native fraud and anti-money laundering solutions and robust regulatory reporting software.
Market Infrastructure Operators - Assisting market infrastructure operators in increasing efficiency, meeting customer needs, and growing revenue across the trade lifecycle.
Brokers and Traders - Helping brokers and traders to confidently plan, optimize, manage risk and execute their business vision.
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Market Participants - Providing market participants with access to liquidity and enabling them to efficiently consume, monitor, analyze, and capitalize on real-time market changes.
Listed Companies - Enabling companies to access capital markets effectively, manage stakeholders and leverage technology to operate and govern effectively.
Investors and Asset Managers - Offering products and services to assist investors and asset managers in optimizing their portfolios and offerings.
Competition
Capital Access Platforms
Our Data business includes proprietary data products. Proprietary data products are made up exclusively of data derived from each exchange’s systems. Competition in the data business is influenced by rapidly changing technology and the creation of new product and service offerings.
Our proprietary data products face competition globally from alternative exchanges and trading venues that offer similar products. Our data business competes with other exchanges and third-party vendors to provide information to market participants. Examples of our competitors in proprietary data products are ICE, Cboe, and TSX.
Our Listing Services business in both the U.S. and Europe provides a means of facilitating capital formation through public capital markets. There are competing ways of raising capital, and we seek to demonstrate the benefits of listing shares on our exchange. Our primary competitor for larger company stock share listings in the U.S. is NYSE. The Nasdaq Stock Market competes with local and international markets located outside the U.S. for listings of equity securities of both U.S. and non-U.S. companies that choose to list (or dual-list) outside of their home country. For example, The Nasdaq Stock Market competes for listings with exchanges in Europe and Asia, such as London Stock Exchange Group plc, or LSE, and The Stock Exchange of Hong Kong Limited. Additionally, we face competition from private equity firms that may elect to keep their portfolio companies as private companies.
The Listings Services business in Europe is characterized by a large number of exchanges competing for new or secondary listings. Each country has one or more national exchanges, which are often the first choice of companies in each respective country. For those considering an alternative, competing European exchanges that frequently attract many listings from outside their respective home countries include LSE, Euronext N.V. and Deutsche Börse AG. In addition to the larger exchanges, companies seeking capital or liquidity from public capital markets are able to raise capital without a regulated market listing and can consider trading their shares on smaller markets and quoting facilities.
Our Index business offers Nasdaq-branded indices and financial products and faces competition from providers of various competing financial indices. For example, there are a number of indices that aim to track the technology sector and thereby compete with the Nasdaq-100 Index and the Nasdaq Composite Index. We face competition from investment banks, dedicated index providers, markets and other product developers, including S&P Dow Jones Indices, MSCI and FTSE Russell.
Workflow & Insights includes our analytics and corporate solutions businesses. Our analytics business faces competition from a broad array of data and analytics suppliers, both established firms and small start-ups. Our primary competitors are Morningstar, FactSet and any number of smaller firms along with start-up data providers and aggregators. Our analytics business offerings compete with other analytics providers, including Addepar and Caissa.
Our corporate solutions business faces competition that can be varied and fragmented. For our Investor Relations Intelligence solutions, there are many regional competitors and relatively few global providers. Other exchange operators are partnering with firms that have capabilities in this area and seeking to acquire relevant assets in order to provide investor relations services to customers alongside listing services. Our ESG Solutions, including Nasdaq Metrio and ESG Advisory, are positioned in evolving markets with competitors offering multiple point solutions providing software, data or consulting services. The competitive landscape for our Governance Solutions products varies by customer segment and geography. Most competitors offer SaaS solutions that are supported by a data centered strategy, while certain firms offer specialized services that focus on a single niche segment. Customers frequently seek single-source providers that are able to address a broad range of needs within a single platform.
Financial Technology
For our Financial Crime Management Technology and trade and market surveillance businesses, competitors include core banking solution providers ranging from small to large, independent solution providers, FinTech start-ups and in-house custom builds. We compete against enterprise solution providers and point solutions for clients with larger AUM. Competitors also include companies that serve multiple industries in addition to financial services with generalized solutions, such as business intelligence tools, data integrators, investigation platforms and software covering the broader compliance lifecycle. Recently, there has been an increase of FinTech start-ups shifting into the surveillance, fraud detection and AML space offering highly-specialized solutions for advanced data analytics, artificial intelligence and machine learning technology. The Financial Crime Management Technology and surveillance offerings compete on a number of factors, including but not limited to, increased workflow efficiency, quality of the data, quality of alerts and pricing.
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Our Financial Crime Management Technology and surveillance offerings must demonstrate the ability to decrease false-positives and provide in-depth views into potential abuses and risks that stem from those cases. These offerings help firms reduce both the reputational and regulatory risk as well as the complexity in efforts to keep markets and financial institutions safe.
Our AxiomSL product, which includes financial, statistical and prudential reporting as well as shareholder disclosures, trade reporting and ESG reporting, competitors include large independent solution providers, in-house solutions at financial institutions as well as some smaller independent point solution providers. As regulatory reporting becomes more granular and time sensitive, the ability of our platform to operate with speed at scale, and with consistency across functional business domains continues to set AxiomSL apart.
For our Calypso product, which includes solutions for cross-asset, front-to-back trading, treasury, risk and collateral management, competitors include similar enterprise solution providers in size and footprint, as well as local/regional players focusing on the smaller end of the client base. In the higher tier of client base, such as global banks, internal development is very often either the incumbent solution or an alternative to FinTech vendors. Competitors also sometimes include companies that provide point solutions, such as pricing library providers, and post-trade service providers.
Our market technology business faces competition from exchanges and exchange-related businesses that internally develop their technology. This model has gradually changed as many operators have recognized the cost-savings made possible by buying technology from third parties. As a result, two types of competitors have emerged in our market technology business: exchange operators and technology providers unaffiliated with exchanges. These organizations make available a range of off-the-shelf technology, including trading, clearing, settlement, depository and information dissemination, and offer customization and operation expertise. Market conditions in market technology are evolving rapidly, which makes continuous investment and innovation a necessity. Our partnership with AWS enables us to compete with other companies that are developing cloud-based exchanges and market technology offerings.
Our trade management services business competes with other exchange operators, extranet providers, and data center providers.
Market Services
We face intense competition in North America and Europe. We seek to provide market participants with greater functionality, trading system stability and performance, high levels of customer service, and efficient pricing. In both North America and Europe, our competitors include other exchange operators, operators of non-exchange trading systems and banks and brokerages that operate their own internal trading pools and platforms.
In the U.S., our options markets compete with exchanges operated by Cboe Global Markets, Inc., or Cboe, Miami International Holdings, Inc., or MIAX, Intercontinental Exchange, Inc., or ICE, Members Exchange, or MEMX, and BOX Options Market. In cash equities in the U.S., we compete with exchanges operated by Cboe, ICE, MIAX, The Investors Exchange, Members Exchange and Long Term Stock Exchange. We also face competition from ATSs, known as “dark pools,” and other less-heavily regulated broker-owned trade facilitation systems, as well as from other types of OTC trading. In Canada, our cash equities exchange competes principally with exchanges such as the Toronto Stock Exchange, or TSX.
Our U.S. Tape plans earn revenue from consolidated data products which are distributed by SEC-mandated consolidators (one for Nasdaq-listed stocks and another for NYSE and other-listed stocks) that share the revenue among the exchanges that contribute data. The consolidated data business is under competitive pressure from other securities exchanges that trade Nasdaq-listed securities. In addition, The Nasdaq Stock Market similarly competes for the tape fees from the sale of information on securities listed on other markets.
In Europe, our cash equities markets compete with exchanges such as Euronext N.V., Deutsche Börse AG, LSE and many Multilateral Trading Facilities, or MTFs, such as Cboe, Turquoise and Aquis. Our competitors in the trading and clearing of options and futures on European equities include Eurex, Cboe, ICE Futures Europe and London Clearing House, or LCH. In addition, in equities markets in Europe, we face competition from other broker-owned systems, dark pools, Systematic Internalizers, or SIs, and other types of OTC trading. Competition among exchanges for trading European equity derivatives tends to occur where there is competition in the trading of the underlying equities. In addition to exchange-based competition, we face competition from OTC derivative markets.
The implementation of MiFID II and MiFIR has resulted in further competitive pressure on our European trading business. SIs are attracting a significant share of electronically matched volume and compete aggressively for the trading of equity securities listed on our Nordic exchanges. Different bilateral trading systems pursuing block business also remain active in Europe. Regulators are continuously monitoring the market structure and have, in a series of consultations, asked for input regarding suggested changes to MiFID II.
Our European fixed income and commodities products and services are subject to competitive pressure from European exchanges and clearinghouses.
Intellectual Property
We believe that our intellectual property assets are important for maintaining the competitive differentiation of our products, systems, software and services, enhancing our ability to access technology of third parties and maximizing our return on research and development investments.
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To support our business objectives and benefit from our investments in research and development, we actively create and maintain a wide array of intellectual property assets, including patents and patent applications related to our innovations, products and services; trademarks related to our brands, products and services; copyrights in software and creative content; trade secrets; and through other intellectual property rights, licenses of various kinds and contractual provisions. We enter into confidentiality and invention assignment agreements with our employees and contractors, and utilize non-disclosure agreements with third parties with whom we conduct business in order to secure and protect our proprietary rights and to limit access to, and disclosure of, our proprietary information.
We own, or have licensed, rights to trade names, trademarks, domain names and service marks that we use in conjunction with our operations and services. We have registered many of our most important trademarks in the U.S. and in foreign countries. For example, our primary “Nasdaq” mark is a registered trademark that we actively seek to protect in the U.S. and in over 50 other countries worldwide.
Over time, we have accumulated a robust portfolio of issued patents in the U.S. and in many other jurisdictions across the world. We currently hold rights to patents relating to certain aspects of our products, systems, software and services, but we primarily rely on the innovative skills, technical competence and marketing abilities of our personnel. No single patent is in itself core to the operations of Nasdaq or any of its principal business areas.
Corporate Venture Program
We operate a corporate venture program to make minority investments primarily in emerging growth FinTech companies that are strategically relevant to, and aligned with, Nasdaq. Investments are made through the venture program to further our research and development efforts and accelerate the path to commercial viability. We expect that capital invested will continue to be modest and will not have a material impact on our consolidated financial statements, existing capital return or deployment priorities. Since its inception in 2017, our venture program has grown in size and has invested in companies covering various sectors, including data, analytics and workflow technologies, blockchain and digital assets, market infrastructure, anti-financial crime, new marketplaces, enabling technologies and ESG. As of December 31, 2023, our investments, which include equity and convertible debt investments, were valued at $169 million.
Environmental, Social and Governance Matters
Nasdaq is committed to our long-term ESG and sustainability strategy, advocacy and oversight. We continue to engage with internal and external stakeholders at all levels regarding sustainability matters. During 2023, we advanced our corporate, community and commercial ESG efforts, including furthering our commitment to climate change awareness, reducing our environmental impact, building a workplace
culture of inclusivity and expanding our portfolio of ESG-related solutions and services.
The Nominating & ESG Committee has formal responsibility and oversight for corporate ESG policies and programs and receives regular reporting on key ESG matters and initiatives. Our Corporate ESG Steering Committee serves as the central coordinating body for our ESG strategy; it is co-chaired by executive leaders and comprised of a cross-functional group of Nasdaq senior executives.
We continued to be committed to our decarbonization and climate strategy, achieving carbon neutrality across all our business operations for the sixth consecutive year and are working towards our short- and long-term net zero science-based targets, which were validated and approved by the Science Based Targets initiative in 2022. In 2023, we were named to the Dow Jones Sustainability North America Index for the eighth consecutive year. We were included on Just Capital’s Just100 list of America’s most just companies and received recognition from the Bloomberg Gender-Equity Index and The Human Rights Campaign’s Corporate Equality Index. In addition, Nasdaq maintained industry leading scores from ESG rating agencies:
MSCI: maintained a rating of “AA,” placing Nasdaq in MSCI’s “Leaders” category.
CDP: earned a place on CDP’s “Climate A List” for climate disclosures and actions for the second consecutive year.
EcoVadis: maintained “Gold Medal” status, a recognition reserved for the top 5% of all rated companies.
2023 S&P Corporate Sustainability Assessment: maintained a score of 60, placing Nasdaq in the 96th percentile of our industry group.
Our environmental footprint is relatively small due to the nature of our business operations. We remain committed to reducing our environmental impact, focusing on several key areas, including our energy use, the management of our workspaces and how we conduct business travel, and engagement with our value chain. We seek to reduce our atmospheric carbon emissions and we manage our water use and the waste associated with our business operations.
We help companies of all ESG maturity levels through our robust combination of technology, tools, data, insights and capital market solutions.
In 2023, we launched three new ESG-related solutions:
Nasdaq Metrio, a SaaS-based, end-to-end platform designed to help corporate clients collect, measure and report sustainability data;
Nasdaq eVestment ESG Analytics, a data analytics platform that unlocks greater transparency for the global institutional market, helping investors make data-driven impact investment decisions; and
Nasdaq Sustainable Lens, a SaaS-based ESG intelligence platform that harnesses the power of generative artificial
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intelligence to help companies navigate complexity and respond to stakeholders’ demands for greater transparency.
During 2023, we also maintained, and continued to expand, our portfolio of ESG services and solutions for our clients and stakeholders.
In 2023, we requested our existing leading suppliers by spend to attest to our Supplier Code of Ethics. The Supplier Code of Ethics, which is available on our website, encourages our suppliers and vendors to adopt sustainability and environmental practices in line with our published Environmental Practices Statement and to promote a diverse and inclusive workforce. Additionally, our new suppliers are required to attest to the Supplier Code of Ethics in connection with the commencement of their engagement.
For more information regarding our ESG efforts in 2023, both internally and externally, please see the section entitled “Human Capital Management” below and our Proxy Statement.
Regulation
We are subject to extensive regulation in the U.S., Canada and Europe.
U.S. Regulation
U.S. federal securities laws establish a system of cooperative regulation of securities markets, market participants and listed companies. SROs conduct the day-to-day administration and regulation of the nation’s securities markets under the close supervision of, and subject to extensive regulation, oversight and enforcement by, the SEC. SROs, such as national securities exchanges, are registered with the SEC.
This regulatory framework applies to our U.S. business in the following ways:
National Securities Exchanges. SROs in the securities industry are an essential component of the regulatory scheme of the Exchange Act responsible for providing fair and orderly markets and protecting investors. The Exchange Act and the rules thereunder, as well as each SRO’s own rules, impose many regulatory and operational responsibilities on SROs, including the day-to-day responsibilities for market and broker-dealer oversight. Moreover, an SRO is responsible for enforcing compliance by its members, and persons associated with its members, with the provisions of the Exchange Act, the rules and regulations thereunder, and the rules of the SRO, including rules and regulations governing the business conduct of its members.
Nasdaq currently operates three cash equity, six options markets and one corporate bond market in the U.S. We operate The Nasdaq Stock Market, The Nasdaq Options Market and the Corporate Bond Market pursuant to The Nasdaq Stock Market’s SRO license; Nasdaq BX and Nasdaq BX Options pursuant to Nasdaq BX’s SRO license; Nasdaq PSX and Nasdaq PHLX pursuant to Nasdaq PHLX’s SRO license; and Nasdaq ISE, Nasdaq GEMX and Nasdaq MRX,
each of which operates an options market under its own SRO license. As SROs, each entity has separate rules pertaining to its broker-dealer members and listed companies, as applicable. Broker-dealers that choose to become members of our exchanges are subject to the rules of those exchanges.
All of our U.S. national securities exchanges are subject to SEC oversight, as prescribed by the Exchange Act, including periodic and special examinations by the SEC. Our exchanges also are potentially subject to regulatory or legal action by the SEC at any time in connection with alleged regulatory violations. We have been subject to a number of routine reviews and inspections by the SEC or external auditors in the ordinary course, and we have been and may in the future be subject to SEC enforcement proceedings. To the extent such actions or reviews and inspections result in regulatory or other changes, we may be required to modify the manner in which we conduct our business, which may adversely affect our business, operating results and financial condition.
Section 19 of the Exchange Act provides that our exchanges must submit to the SEC proposed changes to any of the SROs’ rules, practices and procedures, including revisions to provisions of our certificate of incorporation and by-laws that constitute SRO rules. The SEC will typically publish such proposed changes for public comment, after which the SEC may approve or disapprove the proposal, as it deems appropriate. SEC approval requires a finding by the SEC that the proposal is consistent with the requirements of the Exchange Act and the rules and regulations thereunder. Pursuant to the requirements of the Exchange Act, our exchanges must file with the SEC, among other things, all proposals to change their pricing structure.
Nasdaq conducts real-time market monitoring, certain equity surveillance not involving cross-market activity, most options surveillance, rulemaking, enforcement and membership functions through our Nasdaq Regulation department. We review suspicious trading behavior discovered by our regulatory staff, and depending on the nature of the activity, may refer the activity to FINRA for further investigation. Pursuant to regulatory services agreements between FINRA and our SROs, FINRA provides certain regulatory services to our markets, including some regulation of trading activity and surveillance and investigative functions. Our SROs retain ultimate regulatory responsibility for all regulatory activities performed under regulatory agreements by FINRA, and for fulfilling all regulatory obligations for which FINRA does not have responsibility under the regulatory services agreements.
In addition to its other SRO responsibilities, The Nasdaq Stock Market, as a listing market, also is responsible for overseeing each listed company’s compliance with The Nasdaq Stock Market’s financial and corporate governance standards. Our listing qualifications department evaluates applications submitted by issuers seeking to list their securities on The Nasdaq Stock Market to determine whether the quantitative and qualitative listing standards have been
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satisfied. Once securities are listed, the listing qualifications department monitors each issuer’s on-going compliance with The Nasdaq Stock Market’s continued listing standards.
Broker-dealer regulation. Nasdaq’s broker-dealer subsidiaries are subject to regulation by the SEC, the SROs and various state securities regulators. Nasdaq operates three broker-dealers: Nasdaq Execution Services, LLC, NFSTX, LLC, and Nasdaq Capital Markets Advisory LLC. Each broker-dealer is registered with the SEC, a member of FINRA and registered in the U.S. states and territories required by the operation of its business. In addition, we own a minority interest in NPM Securities, LLC.
Nasdaq Execution Services operates as our routing broker for sending orders from Nasdaq’s U.S. cash equity and options exchanges to other venues for execution. NFSTX is a registered ATS and acts as an intermediary to facilitate secondary transactions in certain funds (both registered or not registered under the Investment Company Act of 1940), business development companies, certain closed-end funds and private real estate investment funds. Nasdaq Capital Markets Advisory acts as a third-party advisor to privately-held or publicly-traded companies during IPOs and various other offerings.
The SEC, FINRA and SROs adopt, and require strict compliance with, rules and regulations applicable to broker-dealers. The SEC, SROs and state securities commissions may conduct administrative proceedings which can result in censures, fines, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer, its officers or employees. The SEC and state regulators may also institute proceedings against broker-dealers seeking an injunction or other sanction. All broker-dealers have an SRO that is assigned by the SEC as the broker-dealer’s Designated Examining Authority. The Designated Examining Authority is responsible for examining a broker-dealer for compliance with the SEC’s financial responsibility rules. FINRA is the current Designated Examining Authority for each of our broker-dealer subsidiaries.
Our registered broker-dealers are subject to regulatory requirements intended to ensure their general financial soundness and liquidity, which require that they comply with certain minimum capital requirements. As of December 31, 2023, each of our broker-dealers were in compliance with applicable capital requirements.
Regulatory contractual relationships with FINRA. Our SROs have signed a series of regulatory service agreements covering the services FINRA provides to the respective SROs. Under these agreements, FINRA personnel act as our agents in performing the regulatory functions outlined above, and FINRA bills us a fee for these services. These agreements have enabled us to reduce our headcount while ensuring that the markets for which we are responsible are properly regulated. However, we have reduced the scope of services provided by FINRA under these regulatory services agreements and are performing certain of those regulatory functions directly. In addition, our SROs retain ultimate
regulatory responsibility for all regulatory activities performed under these agreements by FINRA.
Exchange Act Rule 17d-2 permits SROs to enter into agreements, commonly called Rule 17d-2 agreements, approved by the SEC with respect to enforcement of common rules relating to common members. Our SROs have entered into several such agreements under which FINRA assumes regulatory responsibility for various rules or areas covered by agreements.
Regulation NMS and Options Intermarket Linkage Plan. We are subject to Regulation NMS for our cash equity markets, and our options markets have joined the Options Intermarket Linkage Plan. These are designed to facilitate the routing of orders among exchanges to create a national market system as mandated by the Exchange Act. One of the principal purposes of a national market system is to assure that brokers may execute investors’ orders at the best market price. Both Regulation NMS and the Options Intermarket Linkage Plan require that exchanges avoid trade-throughs, locking or crossing of markets and provide market participants with electronic access to the best prices among the markets for the applicable cash equity or options order.
In addition, Regulation NMS requires that every national securities exchange on which an NMS stock is traded and every national securities association act jointly pursuant to one or more national market system plans to disseminate consolidated information, including a national best bid and national best offer, on quotations for transactions in NMS stocks, and that such plan or plans provide for the dissemination of all consolidated information for an individual NMS stock through a single plan processor.
The UTP Plan was filed with and approved by the SEC as a national market system plan in accordance with the Exchange Act and Regulation NMS to provide for the collection, consolidation and dissemination of such information for Nasdaq-listed securities. The Nasdaq Stock Market serves as the processor for the UTP Plan pursuant to a contract for a two-year term through October 2025. The Nasdaq Stock Market also serves as the administrator for the UTP Plan. To fulfill its obligations as the processor, The Nasdaq Stock Market has designed, implemented, maintained, and operated a data processing and communications system, hardware, software and communications infrastructure to provide processing for the UTP Plan. As the administrator, The Nasdaq Stock Market manages the distribution of market data, the collection of the resulting market data revenue, and the dissemination of that revenue to plan members in accordance with the terms of the UTP Plan and of Regulation NMS.
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In September 2023, the SEC adopted an order to require changes to the governance of securities information processors. The new order would limit the voting right of affiliated SROs (including those owned by Nasdaq) and would limit the ability of SROs to serve as administrators for securities information processors. A schedule for implementing the new order has not been imposed by the SEC, so we are not certain of the timing or the impact on our business or our role as a securities information processor.
In December 2020, the SEC adopted a rule to modify the infrastructure for the collection, consolidation and dissemination of market data for exchange-listed national market stocks, or NMS data. The rule changes include, among other things, requiring exchanges to add more “core data” to the securities information processors, including partial depth-of-book, certain odd-lot quotations/transactions, auction, regulatory, and administrative data; eliminating central, official consolidators of tape plans and enabling multiple competing consolidators to register to aggregate and disseminate core data; and authorizing persons to purchase and aggregate core data directly from the exchanges for their own use. In September 2022, the SEC disapproved fees proposed by exchanges to implement the rule but did not direct the exchanges to take further action to implement the rule. Accordingly, a schedule for implementing the rule has not been imposed by the SEC, and we are not certain of the timing, or the impact, of these new rules on our business or role as a securities information processor.
Regulation SCI. Regulation SCI is a set of rules designed to strengthen the technology infrastructure of the U.S. securities markets. Regulation SCI applies to national securities exchanges, operators of certain ATSs, market data information providers and clearing agencies, subjecting these entities to extensive compliance obligations, with the goals of reducing the occurrence of technical issues that disrupt the securities markets and improving recovery time when disruptions occur. We implemented an inter-disciplinary program to ensure compliance with Regulation SCI. We have also created Regulation SCI policies and procedures, updated internal policies and procedures, and developed an information technology governance program to ensure compliance.
Regulation of Registered Investment Advisor Subsidiary. Our subsidiary NDW is an investment advisor registered with the SEC under the Investment Advisors Act of 1940. In this capacity, NDW is subject to oversight and inspections by the SEC. Among other things, registered investment advisors like NDW must comply with certain disclosure obligations, advertising and fee restrictions and requirements relating to client suitability and custody of funds and securities. Registered investment advisors are also subject to anti-fraud provisions under both federal and state law.
CFTC Regulation. The Dodd-Frank Wall Street Reform and Consumer Protection Act resulted in increased CFTC regulation of our use of certain regulated derivatives products, as well as the operations of some of our subsidiaries outside the U.S. and their customers.
Canadian Regulation
Regulation of Nasdaq Canada is performed by the Canadian Securities Administrators, an umbrella organization of Canada’s provincial and territorial securities regulators. As a recognized exchange in Ontario, Nasdaq Canada must comply with the terms and conditions of its exchange recognition order. While exempt from exchange recognition in each jurisdiction in Canada other than Ontario where Nasdaq Canada carries on business, Nasdaq must also comply with the terms and conditions of an exemption order granted by the other jurisdictions in order to maintain its exemptive status. Oversight of the exchange is performed by Nasdaq Canada’s lead regulator, the Ontario Securities Commission.
Nasdaq Canada is subject to several national marketplace related instruments which set out requirements for marketplace operations, trading rules and managing electronic trading risk. Exchange terms and conditions include but are not limited to, requirements for governance, regulation, rules and rulemaking, fair access, conflict management and financial viability.
European Regulation
Regulation of our markets in the European Union and the European Economic Area focuses on matters relating to financial services, listing and trading of securities, clearing and settlement of securities and commodities, as well as issues related to market abuse.
We are subject to MiFID II and MiFIR, the European Union’s Market Abuse Regulation, which primarily affects our European trading businesses. Many of the provisions of MiFID II and MiFIR are implemented through technical standards drafted by the European Securities and Markets Authority and approved by the European Commission. In addition, in 2016, the European Union adopted legislation on governance and control of the production and use of benchmark indices. The Benchmark Regulation became effective in the European Union beginning in 2018, and Nasdaq must be in compliance beginning January 1, 2026 in relation to benchmarks provided by non-European Nasdaq entities. As the regulatory environment continues to evolve and related opportunities arise, we intend to continue developing our products and services to ensure that the exchanges and clearinghouse that comprise Nasdaq Nordic and Nasdaq Baltic maintain favorable liquidity and offer fair and efficient trading.
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In addition, proposed rules under MiFID II and MiFIR rules are expected to include provisions potentially impacting various parts of Nasdaq’s exchanges and data business, including a proposal to establish a European consolidated tape of pre- and/or post-trade data. The final rules have not yet been issued, and therefore we cannot be certain of the impact on Nasdaq Europe’s offerings.
The entities that operate trading venues in the Nordic and Baltic countries are each subject to local regulations. As a result, we have a strong local presence in each jurisdiction in which we operate regulated businesses. The regulated entities have decision-making power and can adopt policies and procedures and retain resources to manage all operations subject to their license. In Sweden, general supervision of the Nasdaq Stockholm exchange is carried out by the SFSA, while Nasdaq Clearing’s role as CCP in the clearing of derivatives is supervised by the SFSA and overseen by the Swedish central bank (Riksbanken). Additionally, as a function of the Swedish two-tier supervisory model, certain surveillance of the exchange market is carried out by the Nasdaq Stockholm exchange, through its surveillance function.
Nasdaq Stockholm’s exchange activities are regulated primarily by the SSMA, which implements MiFID II into Swedish law and which sets up basic requirements for the board of directors of the exchange and the exchange’s share capital, and which also outlines the conditions on which exchange licenses are issued. The SSMA also provides that any changes to the exchange’s articles of association following initial registration must be approved by the SFSA. Nasdaq Clearing holds the license as a CCP under EMIR.
The SSMA requires exchanges to conduct their activities in an honest, fair and professional manner, and in such a way as to maintain public confidence in the securities markets. When operating a regulated market, an exchange must apply the principles of free access (i.e., that each person which meets the requirements established by law and by the exchange may participate in trading), neutrality (i.e., that the exchange’s rules for the regulated market are applied in a consistent manner to all those who participate in trading) and transparency (i.e., that the participants must be given prompt, simultaneous and correct information concerning trading and that the general public must be given the opportunity to access this information). Additionally, the exchange operator must identify and manage the risks that may arise in its operations, use secure technical systems and identify and handle the conflicts of interest that may arise between the exchange or its owners’ interests and the interest in safeguarding effective risk management and secure technical systems. Similar requirements are set up by EMIR in relation to clearing operations.
The SSMA also contains the framework for both the SFSA’s supervisory work in relation to exchanges and clearinghouses and the surveillance to be carried out by the exchanges themselves. The latter includes the requirement that an exchange should have “an independent surveillance function
with sufficient resources and powers to meet the exchange’s obligations.” That requires the exchange to, among other things, supervise trading and price information, compliance with laws, regulations and good market practice, participant compliance with trading participation rules, financial instrument compliance with relevant listing rules and the extent to which issuers meet their obligation to submit regular financial information to relevant authorities.
Due to the underlying EU regulation, the regulatory requirements in the other Nordic and Baltic countries in which a Nasdaq entity has a trading venue are similar to the requirements in Sweden described above. The supervisory authorities in Sweden, Iceland, Denmark, Finland and Norway all cooperate to safeguard effective and comprehensive supervision of the exchanges comprising Nasdaq Nordic and the systems operated by it, and to ensure a common supervisory approach.
Nasdaq owns a central securities depository known as Nasdaq CSD SE (Societas Europaea)¸ that provides notary, settlement, central maintenance and other services in the Baltic countries and in Iceland. Nasdaq CSD SE is licensed under the European Central Securities Depositories Regulation and is supervised by the respective regulatory institutions.
We operate a licensed exchange, Nasdaq Oslo ASA, in Norway that trades and lists commodity derivatives. Although Norway is not a member of the EU, as a result of the European Economic Area, or EEA, agreement (entered into between the EU and European Free Trade Association) the regulatory environment is broadly similar to what applies in EU member states. Since Norway has adopted legislation mirroring the provisions of MiFID II and MIFIR, the regulatory environment in Norway is similar to Sweden. The Financial Supervisory Authority of Norway supervises the Norwegian exchange on an autonomous basis and the Norwegian exchange also has a separate market surveillance function overseen by the Financial Supervisory Authority.
Confidence in capital markets is paramount for trading to function properly. Nasdaq Nordic carries out market surveillance through an independent unit that is separate from the business operations. The surveillance work is conceptually organized into two functions: one for the review and admission of listing applications and surveillance activities related to issuers (issuer surveillance) and one for surveillance of trading (trading surveillance). The real-time trading surveillance for the Finnish, Icelandic, Danish and Swedish markets has been centralized in Stockholm. In addition, there are designated personnel who carry out surveillance activities at Nasdaq Oslo and the three Baltic exchanges. In Finland, Sweden and Estonia, decisions to list new companies on the main market are made by listing committees that have external members in addition to members from each respective exchange and in the other countries the decision is made either by the respective president of the exchange or by the executive board.
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If there is suspicion that a listed company or member has acted in breach of exchange regulations, the matter is handled by the respective surveillance department. Serious breaches are considered by the respective disciplinary committee in Denmark, Finland, Iceland, Sweden and Norway. Suspected insider trading is reported to the appropriate authorities in the respective country.
In the United Kingdom, The Nasdaq Stock Market, Nasdaq Oslo ASA, Nasdaq Stockholm AB, Nasdaq Copenhagen A/S, and Nasdaq Helsinki Ltd are each subject to regulation by the Financial Conduct Authority as “Recognised Overseas Investment Exchanges.” Nasdaq Clearing is registered as a recognized third country CCP with the Bank of England under the temporary recognition regime. The registration became effective on December 31, 2020, and lasts for four years (which may be extended further), during which time Nasdaq Clearing may continue to act as a CCP vis-a-vis UK members. Nasdaq Clearing has submitted its application for permanent recognition and is awaiting further information as to the process and timeline from the Bank of England.
Human Capital Management
Nasdaq has continued to strengthen our commitment to, and investment in, attracting, retaining, developing and motivating our employees during 2023.
We also continued our efforts to create a diverse and inclusive work environment of equal opportunity, where employees feel respected and valued for their contributions, and where Nasdaq and its employees have opportunities to make positive contributions to our local communities.
As of December 31, 2023, Nasdaq had 8,525 full and part-time employees, including employees of non-wholly owned consolidated subsidiaries.
Employee Safety
We are committed to ensuring the safety and well-being of our employees and stakeholders, and complying with local government regulations in the areas in which we operate. We have adopted a hybrid work environment, where employees both work in our offices and from home, which we believe enables a more consistent in-office experience, greater levels of connectivity and engagement, and an improved sense of community across Nasdaq.
Talent Management and Development
We continued to increase our efforts in attracting and retaining our employees. Nasdaq seeks to hire world-class, innovative, and diverse talent across the globe.
In 2023, our internal employee engagement score, based on our biannual employee engagement surveys, maintained its record high rating achieved in 2022. Our workforce voluntary attrition rate during 2023 was approximately 7.3%, which was nearly four percentage points lower than 2022.
Our Talent Attraction Team focused on strategic marketing and branding to position Nasdaq as a leading employer of choice for talent in our industry, helping to increase our pool of top candidates for open positions, particularly diverse candidates. We ran targeted attraction campaigns in our major markets using (with permission) local employee stories and photos, and partnered with diverse talent organizations, such as the National Society of Black Engineers, AfroTech, Sistas in Sales, Women in Tech, Information Technology Senior Management Forum and the Society of Hispanic Professional Engineers to help improve brand awareness of Nasdaq and attract a higher number of diverse candidates for potential hiring, as compared to 2022.
During 2023, we continued a series called the Manager Forum, facilitated by our CEO and other senior and mid-career leaders, to engage managers in sustained leadership development, alongside our existing formal leadership development curriculum.
Our artificial intelligence-driven career development platform, the Career Hub, matches employees, based on their career aspirations, to internal training, potential mentors, short-term projects and full-time internal roles. This helped us again increase our career satisfaction scores in our biannual employee engagement survey and supported employee retention.
We have invested in professional development for our employees, including offering access to more than 26,000 professional development programs; providing tuition assistance to employees enrolled in degree-granting academic programs; holding internal career fairs and career development programs; connecting employees to our formal mentoring programs and providing one-on-one professional coaching opportunities. We welcomed approximately 150 interns to Nasdaq during 2023.
To reward our employees at various stages of their tenure with Nasdaq, we continued our anniversary recognition program that includes Nasdaq-branded merchandise, and, for major milestones, recognition on our Nasdaq Tower in Times Square. Additionally, our peer-to-peer employee recognition program rewards employees and highlights recognized employees on our internal social media channels, further amplifying the recognition.
A Culture of Inclusion
At Nasdaq, three pillars guide our diversity, equity and inclusion efforts: Workforce, Workplace and Marketplace. Workforce seeks to ensure that our employee population is representative of the communities in which we operate. Workplace seeks to create a positive, equitable workplace experience for all employees of Nasdaq. Marketplace aims to positively influence our peers in the capital market ecosystem and invest in the local communities where we operate.
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Nasdaq sponsors twelve employee-led internal affinity networks. These networks include more than 2,900 members, representing approximately 36% of our eligible employees and contractors. Nasdaq’s Employee Networks support the diverse communities that comprise our workforce, including Black, Asian American, Hispanic, LGBTQ+, female, disabled, veteran, and parent/caregiver communities. Nasdaq’s Employee Networks provide both formal and informal development programs and guidance for their members. The networks benefit the entire Nasdaq workforce through educational events, guest speakers, and volunteering opportunities.
Nasdaq regularly and proactively reviews and monitors diversity data across its businesses, including workforce composition, talent pipeline, and sentiment by business unit. In 2023, we expanded our Inclusion Learning Library, offering two new courses aimed at helping managers lead more inclusively in addition to our two fundamental diversity trainings. We also added customized developmental programs for underrepresented talent, including executive mentoring and accelerated leadership development programs. In 2023, we graduated our first class of Acclerate(her), which is our high-potential leadership program for our female employees to enhance their skills and increase advancement opportunities. Additionally, we expanded our leadership development program aimed to help foster community, understanding and develop fundamental leadership skills for employees from diverse backgrounds.
We continue to seek to monitor our diversity metrics, both through development of our internal talent pool and by focusing on interviewing diverse candidates externally for new employment opportunities. During our annual executive succession planning exercise with our Board of Directors, we realized a 3% increase, as compared to 2022, in the diversity of our senior executive succession candidate pool (considering gender, race and LGBTQ+ status) due to a focus by our senior executives on identifying and cultivating talent deeper in their organizations.
Nasdaq monitors our employee sentiment semi-annually, and has a 92% average participation rate in these employee surveys. We also introduced a new Inclusion Index that helps us to understand where in the organization we may have employees having a differing experience from one another, thus allowing us to seek to understand root causes and explore and implement solutions.
In 2023, Nasdaq was honored with multiple awards, affirming our commitment to excellence and inclusion in human capital management. Nasdaq was named to Seramount 100 Best Companies, the 2023 Seramount Inclusion Index and the ParityLIST for both Women and People of Color to Advance.
Our dedication to fostering diversity extends globally, as Nasdaq was included in the 2023 Seramount Alliance for Global Inclusion and was named to the 2023 Seramount Global Inclusion Index. We received acknowledgement from the Human Rights Campaign, for the fifth consecutive year, underscoring our commitment to LGBTQ+ employees.
Workplace Demographics
Our global female employee base in 2023 was approximately 35%, including the employees that joined us from Adenza in November 2023. Our minority representation in the U.S., which includes Asian, Black/African American, Hispanic/Latino, Multiracial, Native American, Native Hawaiian, and Pacific Islander employees, was 32% in 2023, including Adenza employees.
Gender and Ethnicity Performance Data as of December 31, 2023 and 2022
Gender:
7690
7693
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7695
7697
* In the charts above, not disclosed percentage includes employees that have chosen not to disclose and race and ethnicities that are less than 0.3%.
In 2023, we conducted a pay equity analysis, which supplements our annual multifaceted compensation review program, successfully concluding that review in the fourth quarter of the year. Our pay equity analysis for 2024 has already begun as part of the annual compensation review program to be completed in the same cycle next year.
Finally, to increase transparency of our workforce, Nasdaq publishes statistics on the composition of its own global workforce by gender, and of its U.S. workforce by gender, race and ethnicity, in our U.S. EEO-1 report and our Sustainability Report, which are available on our website.
Compensation and Benefits
Our Total Rewards program is designed to attract, retain, and empower employees to successfully execute our growth strategy and our mission to better serve our clients. Our comprehensive Total Rewards program reflects our commitment to protecting our employees’ health, well-being and financial security.
Our pay-for-performance compensation programs includes market-competitive base salaries, annual bonuses or sales commissions, and equity grants. The majority of our employees are granted annual, long-term equity awards, enabling them to be owners of the company, committed to our long-term success and aligning their interests with the short-term and long-term interests of our shareholders.
Beyond compensation, we offer a suite of programs, benefits, perquisites, and resources. Our core benefits include health (medical, dental, and vision) and risk insurances (life and disability), retirement plans, and an employee stock purchase plan. We also offer robust paid time-off benefits which include vacation, incidental sick days and parental leave.
In addition, all Nasdaq employees, regardless of their location in any of our global offices, are offered paid time off for key life events. Beginning January 1, 2024, we announced a new flexible time off policy for our North American employees. These programs, coupled with our hybrid work schedules, are designed to meet the diverse needs of our work force.
In 2023, we recognized the importance of well-being in the overall performance of our workforce. We introduced toolkits and trainings to help to support both our leaders and employees.
Community Involvement
We are committed to creating lasting, positive change within our Company and the communities we serve. Our employees take pride in being active in our communities. Through our Nasdaq GoodWorks Corporate Responsibility Program, we have committed to supporting the communities in which we live and work by providing eligible full and part-time employees two paid days off per year to volunteer. We also match charitable donations of all Nasdaq employees and contractors up to $1,000, or more in certain circumstances, per calendar year. In 2023, Nasdaq employees raised over $450,000, including donations and matches, supporting almost 600 charities worldwide.
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Nasdaq’s “Purpose” comprises our philanthropic, community outreach, entrepreneurial support and employee volunteerism programs, all designed to leverage our unique place at the center of capital creation, markets, and technology and drive stronger economies, more equitable opportunities and contribute to a more sustainable world.
During 2023, Nasdaq held its third annual “Purpose Week,” which is a week dedicated to celebrating and advancing economic progress for all. Purpose Week 2023 included a series of company-wide webinars, volunteer opportunities, and global activities involving and recognizing company employees. Purpose Week also included a series of workshops with Nasdaq Foundation partnership organizations. We hosted two investor education workshops for employees.

Our inaugural Purpose Forum convened thought leaders, change makers, and innovators from around the world to discuss how Nasdaq can empower individuals to embrace their purpose, advance their economic growth and reach their full potential.
The Nasdaq Foundation works with organizations that promote and support under-resourced communities by reimagining investor engagement and equipping communities with the financial knowledge needed to share in the wealth that markets create.
During 2023, the Nasdaq Foundation provided 13 grants to organizations that seek to fulfill that mission. These grants were awarded to, among others: Defy Ventures, which provides entrepreneur training for formerly incarcerated Black and indigenous men and women and people of color; the GO Project for the GO Families Financial Literacy Workshop Series in New York City; and the Global Entrepreneur Network, in partnership with Hello Alice, for the Equitable Access Program aimed at enhancing credit access and financial education to underserved entrepreneurs facing credit challenges.
Nasdaq Website and Availability of SEC Filings
We file periodic reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.
Our website is http://ir.nasdaq.com. Information on our website is not a part of this Form 10-K. We make available free of charge on our website, or provide a link to, our Forms 10-K, Forms 10-Q and Forms 8-K and any amendments to these documents, that are filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. To access these filings, go to our website and click on “Financials” then click on “SEC Filings.”
Item 1A. Risk Factors
The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. If any of the following risks actually occur, our business, financial condition, or operating results could be adversely affected.
RISKS RELATED TO OUR BUSINESS AND INDUSTRY
Economic conditions and market factors, which are beyond our control, may adversely affect our business and financial condition.
Our business performance is impacted by a number of factors, including general economic conditions, current or expected inflation, interest rate fluctuations, market volatility, changes in investment patterns and priorities, pandemics and other factors that are generally beyond our control. To the extent that global or national economic conditions weaken and result in slower growth or recessions, our business may be negatively impacted. Adverse market conditions could reduce customer demand for our services and the ability of our customers, lenders and other counterparties to meet their obligations to us. Poor economic conditions may result in a reduction in the demand for our products and services, including our market technology, fraud detection, AML and surveillance solutions, data, indices and corporate solutions, or could result in a decline in the number of IPOs, reduced trading volumes or values and deterioration of the economic welfare of our listed companies, which could cause an increase in delistings.
Trading volumes and values are driven primarily by general market conditions and declines in trading volumes or values may affect our market share and impact our pricing. In addition, our Market Services businesses receive revenues from a relatively small number of customers concentrated in the financial industry, so any event that impacts one or more customers or the financial industry in general could impact our revenues.
The number of listings on our markets is primarily influenced by factors such as investor demand, the global economy, available sources of financing, and tax and regulatory policies. Adverse conditions may jeopardize the ability of our listed companies to comply with the continued listing requirements of our exchanges, or reduce the number of issuers launching IPOs, including SPACs, and direct listings. The number of IPOs on our exchanges decreased in both 2023 and 2022, and the number of delistings increased in 2023.
Our Capital Access Platforms revenues may be significantly affected by global economic conditions. Professional subscriptions to our data products are at risk if staff reductions occur in financial services companies or if our customers consolidate, which could result in significant reductions in our professional user revenue or expose us to increased risks relating to dependence on a smaller number of
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customers. In addition, adverse market conditions may cause reductions in the number of non-professional investors with investments in the market and in ETP AUM tracking Nasdaq indices as well as trading in futures linked to Nasdaq indices.
There may be less demand for our analytics, corporate solutions, market technology and risk and regulatory products and services if global economic conditions remain weak. Our customers historically reduce purchases of new services and technology when growth rates decline, thereby diminishing our opportunities to sell new products and services or upgrade existing products and services.
Additionally, during a global economic downturn, or periods of economic, political or regulatory uncertainty, our sales cycle may become longer or more unpredictable due to customer budget constraints or unplanned administrative delays to approve purchases.
A reduction in trading volumes or values, market share of trading, the number of our listed companies, or demand for our products and services due to economic conditions or other market factors could adversely affect our business, financial condition and operating results.
The industries we operate in are highly competitive.
We face significant competition in our Capital Access Platforms, Financial Technology and Market Services segments from other market participants. We face intense competition from other exchanges and markets for market share of trading activity and listings. This competition includes both product and price competition.
The liberalization and globalization of world markets has resulted in greater mobility of capital, greater international participation in local markets and more competition. As a result, both in the U.S. and in other countries, the competition among exchanges and other execution venues has become more intense. Marketplaces in both Europe and the U.S. have also merged to achieve greater economies of scale and scope.
Regulatory changes also have facilitated the entry of new participants in the European Union that compete with our European markets. The regulatory environment, both in the U.S. and in Europe, is structured to maintain this environment of intense competition. In addition, a high proportion of business in the securities markets is becoming concentrated in a smaller number of institutions and our revenue may therefore become concentrated in a smaller number of customers.
We also compete globally with other regulated exchanges and markets, ATSs, MTFs and other traditional and non-traditional execution venues. Some of these competitors also are our customers. Competitors may develop market trading platforms that are more competitive than ours. Competitors may leverage data more effectively or enter into strategic partnerships, mergers or acquisitions that could make their trading, listings, clearing, data or technology businesses more competitive than ours.
We face intense price competition in all areas of our business. In particular, the trading industry is characterized by price competition. We have in the past lowered prices, and in the U.S., increased rebates for trade executions to attempt to gain or maintain market share. These strategies have not always been successful and have at times hurt operating performance. Additionally, we have also been, and may once again be, required to adjust pricing to respond to actions by competitors and new entrants, or due to new SEC regulations, which could adversely impact operating results. We also compete with respect to the pricing of data products and with respect to products for pre-trade book data and for post-trade last sale data.
If we are unable to compete successfully in the industries in which we do business, our business, financial condition and operating results will be adversely affected.
System limitations or failures could harm our business.
Our businesses depend on the integrity and performance of the technology, computer and communications systems supporting them. If new systems fail to operate as intended or our existing systems cannot expand to cope with increased demand or otherwise fail to perform, we could experience unanticipated disruptions in service, slower response times and delays in the introduction of new products and services. We could experience a systems failure due to human error by our employees, contractors or vendors, electrical or telecommunications failures or disruptions, hardware or software failures or defects, cyberattacks, sabotage or similar unexpected events. These consequences could result in service outages, lower trading volumes or values, financial losses, decreased customer satisfaction, litigation and regulatory sanctions. Our markets and the markets that rely on our technology have experienced systems failures and delays in the past and we could experience future systems failures and delays.
Although we currently maintain and expect to maintain multiple computer facilities, and leverage third party cloud providers, that are designed to provide redundancy and back-up to reduce the risk of system disruptions and have facilities in place that are expected to maintain service during a system disruption, such systems and facilities may prove inadequate. If trading volumes increase unexpectedly or other unanticipated events occur, we may need to expand and upgrade our technology, transaction processing systems and network infrastructure. We do not know whether we will be able to accurately project the rate, timing or cost of any volume increases, or expand and upgrade our systems and infrastructure to accommodate any increases in a timely manner.
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While we have programs in place to identify and minimize our exposure to vulnerabilities and work in collaboration with the technology industry to share corrective measures with our business partners, we cannot guarantee that such events will not occur in the future. Any system issue that causes an interruption in services, decreases the responsiveness of our services or otherwise affects our services could impair our reputation, damage our brand name and negatively impact our business, financial condition and operating results.
We must continue to introduce new products, initiatives and enhancements to maintain our competitive position.
We intend to launch new products and initiatives and continue to explore and pursue opportunities to strengthen our business and grow our company. We may spend substantial time and money developing new products, initiatives and enhancements to existing products. If these products and initiatives are not successful or their launches are delayed, we may not be able to offset their costs, which could have an adverse effect on our business, financial condition and operating results.
In our technology operations, we have invested substantial amounts in the development of system platforms, the rollout of our platforms and the adoption of new technologies, including cloud-based infrastructure and artificial intelligence for certain of our offerings. Although investments are carefully planned, there can be no assurance that the demand for such platforms or technologies will justify the related investments. If we fail to generate adequate revenue from planned system platforms or the adoption of new technologies, or if we fail to do so within the envisioned timeframe, it could have an adverse effect on our results of operations and financial condition. In addition, clients may delay purchases in anticipation of new products or enhancements. We may allocate significant amounts of cash and other resources to product technologies or business models for which market demand is lower than anticipated. In addition, the introduction of new products by competitors, the emergence of new industry standards or the development of entirely new technologies to replace existing product offerings could render our existing or future products obsolete.
A decline in trading and clearing volumes or values or market share will decrease our trading and clearing revenues.
Trading and clearing volumes and values are directly affected by economic, political and market conditions, broad trends in business and finance, unforeseen market closures or other disruptions in trading, the level and volatility of interest rates, inflation, changes in price levels of securities and the overall level of investor confidence. Over the past several years, trading and clearing volumes and values across our markets have fluctuated significantly depending on market conditions and other factors beyond our control. Because a significant percentage of our revenues is tied directly to the volume or value of securities traded and cleared on our markets, it is
likely that a general decline in trading and clearing volumes or values would lower revenues and may adversely affect our operating results if we are unable to offset falling volumes or values through pricing changes. Declines in trading and clearing volumes or values may also impact our market share or pricing structures and adversely affect our business and financial condition.
If our total market share in securities decreases relative to our competitors, our venues may be viewed as less attractive sources of liquidity. If our exchanges are perceived to be less liquid, then our business, financial condition and operating results could be adversely affected.
Since some of our exchanges offer clearing services in addition to trading services, a decline in market share of trading could lead to a decline in clearing and depository revenues. Declines in market share also could result in issuers viewing the value of a listing on our exchanges as less attractive, thereby adversely affecting our listing business. Finally, declines in market share of Nasdaq-listed securities, or recently adopted SEC rules and regulations, could lower The Nasdaq Stock Market’s share of tape pool revenues under the consolidated data plans, thereby reducing the revenues of our U.S. Tape plans business.
Our role in the global marketplace positions us at greater risk for a cyberattack.
Our systems and operations are vulnerable to damage or disruption from security breaches. Due to our adoption of a hybrid work environment, we have a broader and more distributed network footprint and increased reliance on the home networks of employees, and such remote work may cause heightened cybersecurity and operational risks. Some of these threats include attacks from foreign governments, hacktivists, insiders and criminal organizations. Foreign governments may seek to obtain a foothold in U.S. critical infrastructure, hacktivists may seek to deploy denial of service attacks to bring attention to their cause, insiders may pose a risk of human error or malicious activity and criminal organizations may seek to profit from stolen data. Computer malware, such as viruses and worms, also continue to be a threat with ransomware increasingly being used by criminals to extort money. Given our position in the global securities industry, we may be more likely than other companies to be a direct target, or an indirect casualty, of such events.
While we continue to employ and invest additional resources to monitor our systems and protect our infrastructure, these measures may prove insufficient depending upon the attack or threat posed. Any system issue, whether as a result of an intentional breach, collateral damage from a new virus or a non-malicious act, the use of artificial intelligence by bad actors, including the use of such tools to engage in social engineering or similar activities, or due to a cybersecurity breach of a customer that results in a loss of our data or compromises our systems or those of our other customers utilizing the same products, could damage our reputation and result in: a loss of customers; disrupted customer relationships; the loss of our intellectual property or sensitive
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data; lower trading volumes or values, significant liabilities, litigation or regulatory fines or otherwise have a negative impact on our business, our products and services, financial condition and operating results. Further, cybersecurity incidents that impact our vendors and other third parties that support our organization and industry could directly or indirectly impact us. For example, a data breach involving one of our vendors occurred in 2023, and was identified and mitigated by the vendor before material damage to Nasdaq occurred. There can be no assurance we will be able to identify and mitigate every incident involving cybersecurity attacks, breaches or incidents. A system breach may go undetected for an extended period of time.
Expanded cybersecurity regulations, and increased cybersecurity infrastructure and compliance costs, may adversely impact our results of operations.
As cybersecurity threats continue to increase in frequency and sophistication, and as the domestic and international regulatory and compliance structure related to information, cybersecurity, data privacy and data usage becomes increasingly complex and exacting, we may be required to devote significant additional resources to strengthen our cybersecurity capabilities, and to identify and remediate any security vulnerabilities. Compliance with laws and regulations concerning cybersecurity, data privacy and data usage could result in significant expense, and any failure to comply could result in proceedings against us by regulatory authorities or other third parties. Costs for bolstering cybersecurity capabilities, and increased cybersecurity and data privacy compliance costs, could adversely impact our business, financial condition and operating results. Additionally, our clients increasingly demand rigorous contractual, certification and audit provisions regarding cybersecurity, data protection and data usage, which may also increase our overall compliance burden and costs in meeting such obligations.
The success of our business depends on our ability to keep up with rapid technological and other competitive changes affecting our industry. Specifically, we must complete development of, successfully implement and maintain platforms that have the functionality, performance, capacity, reliability and speed required by our business and our regulators, as well as by our customers.
The markets in which we compete are characterized by rapidly changing technology, evolving industry and regulatory standards, frequent enhancements to existing products and services, the adoption of new services and products and changing customer demands. We are reliant on our customers that purchase our on-premise solutions to maintain a certain level of network infrastructure for our products to operate and to allow for our support of those products, and there is no assurance that a customer will implement such measures. We may not be able to keep up with rapid technological and other competitive changes affecting our industry. For example, we must continue to enhance our platforms to remain competitive as well as to
address our regulatory responsibilities, and our business will be negatively affected if our platforms or the technology solutions we sell to our customers fail to function as expected. If we are unable to develop our platforms to include other products and markets, or if our platforms do not have the required functionality, performance, capacity, reliability and speed required by our business and our regulators, as well as by our customers, we may not be able to compete successfully. Further, our failure to anticipate or respond adequately to changes in technology and customer preferences or any significant delays in product development efforts, could have a material adverse effect on our business, financial condition and operating results.
Our artificial intelligence initiatives under development and the use of artificial intelligence in certain of our existing products may be unsuccessful and may give rise to various risks, which could adversely affect our business, reputation, or operating results.
We are making significant investments in artificial intelligence, or AI, including generative AI, to, among other things, develop new products or features for our existing products, including our anti-financial crime, investor relations and investment analytics solutions, and to enhance and refine our internal business operations. As AI is a new and evolving technology in the early stages of commercial use, there are significant risks involved in the development and deployment of AI, and there can be no assurance that the use of AI will enhance our products or services or augment our business or operating results. Market acceptance of AI technologies is uncertain, and we may be unsuccessful in our product development efforts. Moreover, our AI-related product initiatives and offerings, or use in our internal business operations, may give rise to risks related to harmful content, accuracy, bias, discrimination, intellectual property infringement, the ability to obtain intellectual property protection, misappropriation or leakage, defamation, data privacy, and cybersecurity, among others. In addition, these risks include the possibility of new or enhanced laws or regulations, for which compliance may be costly and burdensome or involve litigation or other legal liability, or additional oversight, audits or enforcement under existing laws or regulations. The use of AI may also give rise to ethical concerns or negative public perceptions, which may cause brand or reputational harm. Additionally, our competitors may be developing their own AI products and technologies, which may be superior in features or functionality, or cost, to our offerings. Any of these factors could adversely affect our business, reputation, or operating results.
Failure to attract and retain key personnel may adversely affect our ability to conduct our business.
Our future success depends, in large part, upon our ability to attract and retain highly qualified and skilled professional personnel that can learn and embrace new technologies. In the current tight labor market, we have intensified our efforts to recruit and retain talent. Competition for key personnel in
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the various localities and business segments in which we operate is intense. We have, and may continue to, experience higher compensation costs to retain personnel, and hire new talent, that may not be offset by improved productivity, higher revenues or increased sales. Our ability to attract and retain key personnel, in particular senior officers or technology personnel, including from companies that we acquire, will be dependent on a number of factors, including prevailing market conditions, office/remote working arrangements and compensation and benefit packages offered by companies competing for the same talent. There is no guarantee that we will have the continued service of key employees who we rely upon to execute our business strategy and identify and pursue strategic opportunities and initiatives. Our ability to execute our business strategy could be impaired if we are unable to replace such persons without incurring significant costs or in a timely manner or at all.
Our clearinghouse operations expose us to risks, including credit or liquidity risks that may include defaults by clearing members, or insufficiencies in margins or default funds.
We are subject to risks relating to our operation of a clearinghouse, including counterparty and liquidity risks, risk of defaults by clearing members and risks associated with adequacy of the customer margin and of default funds. Our clearinghouse operations expose us to counterparties with differing risk profiles. We may be adversely impacted by the financial distress or failure of a clearing member, which may cause us negative financial impact, reputational harm or regulatory consequences, including litigation or regulatory enforcement actions.
We are exposed to credit risk from third parties, including customers, counterparties and clearing agents.
We are exposed to credit risk from third parties, including customers, counterparties and clearing agents. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons.
We clear a range of equity-related and fixed-income-related derivative products, commodities and resale and repurchase agreements. We assume the counterparty risk for all transactions that are cleared through Nasdaq Clearing on our markets and guarantee that our cleared contracts will be honored. We enforce minimum financial and operational criteria for membership eligibility, require members and investors to provide collateral, and maintain established risk policies and procedures to ensure that the counterparty risks are properly monitored and proactively managed; however, none of these measures provides absolute assurance against experiencing financial losses from defaults by our counterparties on their obligations. No guarantee can be given that the collateral provided will at all times be sufficient. Although we maintain clearing capital resources to serve as an additional layer of protection to help ensure that we are able to meet our obligations, these resources also may not be sufficient.
We also have credit risk related to transaction and subscription-based revenues that are billed to customers on a monthly or quarterly basis, in arrears.
Credit losses such as those described above could adversely affect our consolidated financial position and results of operations.
Technology issues relating to our role as exclusive processor for Nasdaq-listed stocks could affect our business.
Nasdaq, as technology provider to the UTP Operating Committee, has implemented measures to enhance the resiliency of the existing processor system. Nasdaq transferred the processor technology platform to our INET platform and this migration further enhanced the resiliency of the processor systems. However, if future outages occur or the processor systems fail to function properly while we are operating the systems, it could have an adverse effect on our business, reputation and financial condition.
Stagnation or decline in the listings market could have an adverse effect on our revenues.
The market for listings is dependent on the prosperity of companies and the availability of risk capital. A stagnation or decline in the number of new listings, or an increase in the number of delistings, on The Nasdaq Stock Market and the Nasdaq Nordic and Nasdaq Baltic exchanges could cause a decrease in revenues for future years. In 2023, we again experienced a decrease in new listings from IPOs, including SPACs, and an increase in delistings. A prolonged decrease in the number of listings, or failure of existing SPACs to successfully complete transactions with target companies and dissolve, could negatively impact the growth of our revenues. Our Corporate Solutions business is also impacted by declines in the listings market or increases in acquisitions activity as there may be fewer publicly-traded customers that need our products.
RISKS RELATED TO TRANSACTIONAL ACTIVITIES AND STRATEGIC RELATIONSHIPS
We may not be able to successfully integrate acquired businesses, which may result in an inability to realize the anticipated benefits of our acquisitions.
We must rationalize, coordinate and integrate the operations of our acquired businesses, including the acquisition of Adenza, which was completed in November 2023. This process involves complex technological, operational and personnel-related challenges, which are time-consuming and expensive and may disrupt our business. The difficulties, costs and delays that could be encountered may include:
difficulties, costs or complications in combining the companies’ operations, including technology platforms, and security measures and infrastructure that may need greater remediation than anticipated, which could lead to us not achieving the synergies we anticipate or customers not renewing their contracts with us as we migrate platforms;
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incompatibility of systems and operating methods;
reliance on, or provision of, transition services;
inability to use capital assets efficiently to develop the business of the combined company;
difficulties of complying with government-imposed regulations in the U.S. and abroad, which may be conflicting;
resolving possible inconsistencies in standards, controls, procedures and policies, business cultures and compensation structures;
the diversion of management’s attention from ongoing business concerns and other strategic opportunities;
difficulties in operating businesses we have not operated before;
difficulties of integrating multiple acquired businesses simultaneously;
the retention of key employees and management;
the implementation of disclosure controls, internal controls and financial reporting systems at non-U.S. subsidiaries to enable us to comply with U.S. GAAP and U.S. securities laws and regulations, including the Sarbanes-Oxley Act of 2002, required as a result of our status as a reporting company under the Exchange Act;
the coordination of geographically separate organizations;
the coordination and consolidation of ongoing and future research and development efforts;
possible tax costs or inefficiencies associated with integrating the operations of a combined company;
pre-tax restructuring and revenue investment costs;
the retention of strategic partners and attracting new strategic partners; and
negative impacts on employee morale and performance as a result of job changes and reassignments.
Foreign acquisitions, or acquisitions involving companies with numerous foreign subsidiaries, involve risks in addition to those mentioned above, including those related to integration of operations across different cultures and languages, our ability to enforce contracts in various jurisdictions, currency risks and the particular economic, political and regulatory risks associated with specific countries. We may not be able to address these risks successfully, or at all, without incurring significant costs, delays or other operating problems that could disrupt our business and have a material adverse effect on our financial condition.
For these reasons, we may not achieve the anticipated financial and strategic benefits from our acquisitions and strategic initiatives. Any actual cost savings and synergies may be lower than we expect and may take a longer time to achieve than we anticipate, and we may fail to realize the anticipated benefits of acquisitions.
We rely on third parties to perform certain functions, and our business could be adversely affected if these third parties fail to perform as expected or experience service interruptions affecting our operations.
We rely on third parties for regulatory, data center, cloud computing, data storage and processing, connectivity, data content, clearing, maintaining markets and exchange liquidity and other services. Interruptions or delays in services from our third-party providers could impair the delivery of our services and harm our business. To the extent that any of our vendors or other third-party service providers experiences difficulties or a significant disruption, breach or outage, materially changes their business relationship with us or is unable for any reason to perform their obligations, including due to geopolitical instability, our business or our reputation may be materially adversely affected.
Our access to cloud service provider infrastructure could be limited by a number of events, including technical or infrastructure failures, natural disasters or cybersecurity attacks. As we continue to grow our SaaS businesses, our dependency on the continuing operation and availability of these cloud service providers increases. If our cloud services from third party providers are unavailable to us for any reason, or there are cloud service disruptions or a delay or inability to access our exchanges, platforms or certain of our cloud products or features, such unavailability or delays may adversely affect our clients, which could significantly impact our reputation, operations, business, and financial results.
For example, in 2023, we continued to migrate our North American markets to AWS in a phased approach, as we added two additional exchanges to our cloud-enabled infrastructure. AWS operates a platform that we use to provide services to our clients, and therefore we are vulnerable to service outages on the AWS platform that affect Nasdaq workloads running or stored in the AWS environment. If AWS does not deliver our system requirements on time, fails to provide maintenance and support to our specifications or a migration experiences integration challenges, the successful migration of our exchanges to the AWS cloud platform may be significantly delayed, which may adversely affect our reputation and financial results.
We also rely on members of our trading community to maintain markets and add liquidity. To the extent that any of our largest members experience difficulties, materially change their business relationship with us or are unable for any reason to perform market making activities, our business or our reputation may be materially adversely affected.
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We may be required to recognize impairments of our goodwill, intangible assets or other long-lived assets in the future.
Our business acquisitions typically result in the recording of goodwill and intangible assets, and the recorded values of those assets may become impaired in the future. As of December 31, 2023, goodwill totaled $14.1 billion and intangible assets, net of accumulated amortization, totaled $7.4 billion. The determination of the value of such goodwill and intangible assets requires management to make estimates and assumptions that affect our consolidated financial statements.
We assess goodwill and intangible assets, as well as other long-lived assets, including equity method investments, equity securities, and property and equipment, for potential impairment on an annual basis or more frequently if indicators of impairment arise. We estimate the fair value of such assets by assessing many factors, including historical performance and projected cash flows. Considerable management judgment is necessary to project future cash flows and evaluate the impact of expected operating and macroeconomic changes on these cash flows. The estimates and assumptions we use are consistent with our internal planning process. However, there are inherent uncertainties in these estimates.
There were no impairment charges recorded relating to goodwill and indefinite-lived intangible assets and there were no material impairment charges recorded relating to other long-lived assets in 2023, 2022 and 2021.
We may experience future events that may result in asset impairments. Future disruptions to our business, prolonged economic weakness, due to pandemics or otherwise, or significant declines in operating results at any of our reporting units or businesses, may result in impairment charges to goodwill, intangible assets or other long-lived assets. A significant impairment charge in the future could have a material adverse effect on our operating results.
Acquisitions, divestments, investments, joint ventures and other transactional activities may require significant resources and/or result in significant unanticipated losses, costs or liabilities.
Over the past several years, acquisitions, such as Adenza, have been, or are expected to be, significant factors in our growth. We have divested businesses and may continue to divest additional businesses or assets in the future. Although we cannot predict our transactional activities, we believe that additional acquisitions, divestments, investments, joint ventures and other transactional activities will be important to our strategy. Such transactions may be material in size and scope. Other potential purchasers of assets in our industry may have greater financial resources than we have. Therefore, we cannot be sure that we will be able to complete future transactions on terms favorable to us.
We also invest in early-stage companies through our Nasdaq Ventures program and hold minority interests in other entities. Given the size of these investments, we do not have operational control of these entities and may have limited visibility into risk management practices. Thus, we may be subject to additional capital requirements in certain circumstances and financial and reputational risks if there are operational failures.
We may finance future transactions by issuing additional equity and/or debt. The issuance of additional equity in connection with any such transaction could be substantially dilutive to existing shareholders. In addition, the announcement or implementation of future transactions by us or others could have a material effect on the price of our common stock. The issuance of additional debt could increase our leverage substantially. Additional debt may reduce our liquidity, curtail our access to financing markets, impact our standing with credit rating agencies and increase the cash flow required for debt service. Any incremental debt incurred to finance a transaction could also place significant constraints on the operation of our business.
Furthermore, any future transactions could entail a number of additional risks, including:
the inability to maintain key pre-transaction business relationships;
increased operating costs;
the inability to meet our target for return on invested capital;
increased debt obligations, which may adversely affect our targeted debt ratios;
risks to the continued achievement of our strategic direction;
risks associated with divesting employees, customers or vendors when divesting businesses or assets;
declines in the value of investments;
exposure to unanticipated liabilities, including after a transaction is completed;
incurred but unreported claims for an acquired company;
difficulties in realizing projected efficiencies, synergies and cost savings; and
changes in our credit rating and financing costs.
RISKS RELATED TO LIQUIDITY AND CAPITAL RESOURCES
A downgrade of our credit rating could increase the cost of our funding from the capital markets.
Our debt is currently rated investment grade by two of the major rating agencies. These rating agencies regularly evaluate us, and their ratings of our long-term debt and commercial paper are based on a number of factors, including our financial strength and corporate development activity, as well as factors not entirely within our control, including
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conditions affecting our industry generally. There can be no assurance that we will maintain our current ratings. Our failure to maintain such ratings could reduce or eliminate our ability to issue commercial paper and adversely affect the cost and other terms upon which we are able to obtain funding and increase our cost of capital. A reduction in credit ratings would also result in increases in the cost of our commercial paper and other outstanding debt as the interest rate on the outstanding amounts under our credit facilities and our senior notes fluctuates based on our credit ratings.
Our leverage limits our financial flexibility, increases our exposure to weakening economic conditions and may adversely affect our ability to obtain additional financing.
Our indebtedness as of December 31, 2023 was $10.5 billion. We may borrow additional amounts by utilizing available liquidity under our existing credit facilities, issuing additional debt securities or issuing short-term, unsecured commercial paper notes through our commercial paper program.
Our leverage and reliance on the capital markets could:
reduce funds available to us for operations and general corporate purposes or for capital expenditures as a result of the dedication of a substantial portion of our consolidated cash flow from operations to the payment of principal and interest on our indebtedness;
increase our exposure to a continued downturn in general economic conditions;
place us at a competitive disadvantage compared with our competitors with less debt;
affect our ability to obtain additional financing in the future for refinancing indebtedness, acquisitions, working capital, capital expenditures or other purposes; and
increase our cost of debt and reduce or eliminate our ability to issue commercial paper.
In addition, we must comply with the covenants in our credit facilities. Among other things, these covenants restrict our ability to effect certain fundamental transactions, dispose of certain assets, incur additional indebtedness and grant liens on assets. Failure to meet any of the covenant terms of our credit facilities could result in an event of default. If an event of default occurs, and we are unable to receive a waiver of default, our lenders may increase our borrowing costs, restrict our ability to obtain additional borrowings and accelerate repayment of all amounts outstanding.
We will need to invest in our operations to maintain and grow our business and to integrate acquisitions, and we may need additional funds, which may not be readily available.
We depend on the availability of adequate capital to maintain and develop our business. Although we believe that we can meet our current capital requirements from internally generated funds, cash on hand and borrowings under our revolving credit facility and commercial paper program, if the capital and credit markets experience volatility, access to capital or credit may not be available on terms acceptable to us or at all. Rising interest rates could adversely affect our
ability to pursue new financing opportunities, and it may be more expensive for us to issue new debt securities. Limited access to capital or credit in the future could have an impact on our ability to refinance debt, maintain our credit rating, meet our regulatory capital requirements, engage in strategic initiatives, make acquisitions or strategic investments in other companies, pay dividends, repurchase our stock or react to changing economic and business conditions. If we are unable to fund our capital or credit requirements, it could have an adverse effect on our business, financial condition and operating results.
In addition to our debt obligations, we will need to continue to invest in our operations for the foreseeable future to integrate acquired businesses and to fund new initiatives. If we do not achieve the expected operating results, we will need to reallocate our cash resources. This may include borrowing additional funds to service debt payments, which may impair our ability to make investments in our business or to integrate acquired businesses.
If we need to raise funds through incurring additional debt, we may become subject to covenants more restrictive than those contained in our credit facilities, the indentures governing our notes and our other debt instruments. Furthermore, if adverse economic conditions occur, we could experience decreased revenues from our operations which could affect our ability to satisfy financial and other restrictive covenants to which we are subject under our existing indebtedness.
RISKS RELATED TO LEGAL AND REGULATORY MATTERS
We operate in a highly regulated industry and may be subject to censures, fines and enforcement proceedings if we fail to comply with regulatory obligations that can be ambiguous and can change unexpectedly.
We operate in a highly regulated industry and are subject to extensive regulation in the U.S., Europe and Canada. The securities trading industry is subject to significant regulatory oversight and could be subject to increased governmental and public scrutiny in the future that can change in response to global conditions and events, or due to changes in trading patterns, such as due to the recent volatility involving the trading of certain stocks.
Our ability to comply with complex and changing regulation is largely dependent on our establishment and maintenance of compliance, audit and reporting systems that can quickly adapt and respond, as well as our ability to attract and retain qualified compliance and other risk management personnel. There is no assurance that our policies and procedures will always be effective or that we will always be successful in monitoring or evaluating the risks to which we are or may be exposed.
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Our regulated markets are subject to audits, investigations, administrative proceedings and enforcement actions relating to compliance with applicable rules and regulations. Regulators have broad powers to impose fines, penalties or censure, issue cease-and-desist orders, prohibit operations, revoke licenses or registrations and impose other sanctions on our exchanges, broker-dealers, central securities depositories, clearinghouse and markets for violations of applicable requirements.
In the future, we could be subject to regulatory investigations or enforcement proceedings that could result in substantial sanctions, including revocation of our operating licenses. Any such investigations or proceedings, whether successful or unsuccessful, could result in substantial costs, the diversion of resources, including management time, and potential harm to our reputation, which could have a material adverse effect on our business, results of operations or financial condition. In addition, our exchanges could be required to modify or restructure their regulatory functions in response to any changes in the regulatory environment, or they may be required to rely on third parties to perform regulatory and oversight functions, each of which may require us to incur substantial expenses and may harm our reputation if our regulatory services are deemed inadequate.
The regulatory framework under which we operate and new regulatory requirements or new interpretations of existing regulatory requirements could require substantial time and resources for compliance, which could make it difficult and costly for us to operate our business.
Under current U.S. federal securities laws, changes in the rules and operations of our securities markets, including our pricing structure, must be reviewed and in many cases explicitly approved by the SEC. The SEC may approve, disapprove, or recommend changes to proposals that we submit. In addition, the SEC may delay either the approval process or the initiation of the public comment process. Favorable SEC rulings and interpretations can be challenged in and reversed by federal courts of appeals, reducing or eliminating the value of such prior interpretations. Any delay in approving changes, or the altering of any proposed change, could have an adverse effect on our business, financial condition and operating results.
We must compete not only with non-exchanges, such as ATSs that are not subject to the same SEC approval requirements and processes, but also with other exchanges that may have lower regulation and surveillance costs than us. There is a risk that trading will shift to exchanges or non-exchanges that charge lower fees because, among other reasons, they spend significantly less on regulation.
In 2016, the SEC approved a plan for Nasdaq and other exchanges to establish a CAT to improve regulators’ ability to monitor trading activity. In addition to increased regulatory obligations, implementation of a CAT has resulted in significant additional expenditures, including to implement the new technology to meet many of the plan’s requirements. Creating the CAT has required the development and
implementation of complex and costly technology. This development effort has been funded by the SROs (including Nasdaq) in exchange for promissory notes. In September 2023, the SEC approved a “Funding Model” for the CAT that allocated one-third of CAT expenses to the SROs, including Nasdaq, and two-thirds of CAT expenses to the industry. This SEC approval order has been appealed to the 11th Circuit U.S. Court of Appeals, and the appeal remains pending. In January 2024, the SROs submitted filings, which remain pending, to the SEC to establish the rate at which the industry would reimburse the SROs for its two-thirds share of CAT expenses. Those two pending matters could be resolved unfavorably to the SEC and to the SROs, resulting in a delay in recovering expenses or the inability to recover those expenses. As of December 31, 2023, we have accrued a net receivable of $115 million in connection with our portion of expenses related to the CAT implementation. In addition, the ongoing failure to timely launch or properly operate such technology exposes Nasdaq and other exchanges to SEC fines.
In addition, our registered broker-dealer subsidiaries are subject to regulation by the SEC, FINRA and other SROs. These subsidiaries are subject to regulatory requirements intended to ensure their general financial soundness and liquidity, which require that they comply with certain minimum capital requirements. The SEC and FINRA impose rules that require notification when a broker-dealer’s net capital falls below certain predefined criteria, dictate the ratio of debt to equity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, the SEC’s Uniform Net Capital Rule and FINRA rules impose certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC and FINRA for certain withdrawals of capital. Any failure to comply with these broker-dealer regulations could have a material adverse effect on the operation of our business, financial condition and operating results.
Our non-U.S. business is subject to regulatory oversight in all the countries in which we operate regulated businesses, such as exchanges, clearinghouses or central securities depositories. In these countries, we have received authorization from the relevant authorities to conduct our regulated business activities. The authorities may issue regulatory fines or may ultimately revoke our authorizations if we do not suitably carry out our regulated business activities. The authorities are also entitled to request that we adopt measures in order to ensure that we continue to fulfill the authorities’ requirements. We are also subject to current and forthcoming regulations applicable to the financial services sector generally including, but not limited to, the Digital Operational Resilience Act, or DORA, which will become effective in 2025. Such regulations may impact our operational, contracting and compliance costs by requiring the implementation of new risk management procedures, requirements for procuring information and communication
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technology services, and ongoing processes to monitor compliance; failure to maintain compliance may cause us to be subject to regulatory actions and fines. Additionally, we are subject to the obligations under the Benchmark Regulation ((EU) 2016/1011), compliance with which could be costly or cause a change in our business practices.
Certain of our customers operate in a highly regulated industry. Regulatory authorities could impose regulatory changes that could impact the ability of our customers to use our exchanges. The loss of a significant number of customers or a reduction in trading activity on any of our exchanges as a result of such changes could have a material adverse effect on our business, financial condition and operating results. In addition, regulatory changes could impact the ability of current or prospective customers to procure commercial services from us, increase our cost of delivery or performance due to regulatory-driven changes to services or related business processes and lengthen sales cycles as customers are required to conduct additional diligence and contracting processes prior to procuring our services.
Regulatory changes and changes in market structure and proprietary data could have a material adverse effect on our business.
Regulatory changes adopted by the SEC or other regulators of our markets, and regulatory changes that our markets may adopt in fulfillment of their regulatory obligations, could materially affect our business operations. In recent years, there has been increased regulatory and governmental focus on issues affecting the securities markets, including market structure, technological oversight and fees for proprietary market data, connectivity and transactions. The SEC, FINRA and the national securities exchanges have introduced several initiatives to ensure the oversight, integrity and resilience of markets. In December 2022, the SEC proposed significant rule changes that, if adopted in their current form, would substantially alter how stocks are traded in the United States. In October 2023, the SEC proposed to require exchanges to modify their pricing practices for certain types of transactions. While we and other market participants have the opportunity to submit comments on these proposals, and we will adjust our business model in accordance with any new SEC regulations implemented, the adoption of these proposals regarding trading may negatively impact our business and revenue.
With respect to our regulated businesses, our business model can be severely impacted by policy decisions. In May 2020, the SEC adopted an order to require changes to the governance of securities information processors. In December 2020, the SEC adopted a rule to modify the infrastructure for the collection, consolidation and dissemination of market data for exchange-listed national market stocks. In 2022, the U.S. Court of Appeals for District of Columbia Circuit vacated portions of the governance order but upheld the remainder of the SEC’s 2022 actions. If the remaining aspects of the order and rule are fully implemented, they may adversely affect our revenues. The timing for the implementation is currently unknown, and we believe they may take two or more years to fully implement. If the remaining aspects of the order and rule are ultimately implemented as set forth in their adopting releases, demand for certain of our proprietary tape share data products may be reduced, or we may have to reduce our pricing to compete with other entrants into the market for consolidated data. Our opponents in some markets are larger and better funded and, if successful in influencing certain policies, may successfully advocate for positions that adversely impact our business. These regulatory changes could impose significant costs, including litigation costs, and other obligations on the operation of our exchanges and processor systems and have other impacts on our business.
In Canada, all new marketplace fees and changes to existing fees, including trading and market data fees, must be filed with and approved by the Ontario Securities Commission. The Canadian Securities Administrators adopted a Data Fees Methodology that restricts the total amount of fees that can be charged for professional uses by all marketplaces to a reference benchmark. Currently, all marketplaces are subject to annual reviews of their market data fees tying market data revenues to pre- and post- trade market share metrics. Permitted fee ranges are based on an interim domestic benchmark that is subject to change to an international benchmark, which could lower the permitted fees charged by marketplaces, which could adversely impact our revenues.
Our European exchanges currently offer market data products to customers on a non-discriminatory and reasonable commercial basis. The MiFID II/MiFIR rules entail that the price for regulated market data such as pre- and post-trade data shall be based on cost plus a reasonable margin. However, these terms are not clearly defined. There is a risk that a different interpretation of these terms may influence the fees for European market data products adversely. In addition, any future actions by European Union institutions could affect our ability to offer market data products in the same manner as today, thereby causing an adverse effect on our market data revenues.
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We are subject to litigation risks and other liabilities.
Many aspects of our business potentially involve substantial liability risks. Although under current law we are immune from private suits arising from conduct within our regulatory authority and from acts and forbearances incident to the exercise of our regulatory authority, this immunity only covers certain of our activities in the U.S., and we could be exposed to liability under national and local laws, court decisions and rules and regulations promulgated by regulatory agencies.
We face risks related to compliance with economic sanctions (including those administered by the U.S. Office of Foreign Assets Control), export controls, corruption (including the U.S. Foreign Corrupt Practices Act) and money laundering. While we maintain compliance programs to prevent and detect potential violations, such programs cannot completely eliminate the risk of non-compliance. Since our Financial Crime Management Technology and surveillance solutions are important offerings, a significant compliance event involving one of these areas could more negatively impact our business than a comparable business without this service offering.
Liability could also result from disputes over the terms of a trade, claims that a system failure or delay cost a customer money, claims we entered into an unauthorized transaction or claims that we provided materially false or misleading statements in connection with a securities transaction. Although we carry insurance that may limit our risk of damages in some cases, we still may incur significant legal expenses and may sustain uncovered losses or losses in excess of available insurance that would affect our business, financial condition and results of operations.
We have self-regulatory obligations and also operate for-profit businesses, and these two roles may create conflicts of interest.
We have obligations to regulate and monitor activities on our markets and ensure compliance with applicable law and the rules of our markets by market participants and listed companies. In the U.S., some have expressed concern about potential conflicts of interest of “for-profit” markets performing the regulatory functions of an SRO. We perform regulatory functions and bear regulatory responsibility related to our listed companies and our markets. Any failure by us to diligently and fairly regulate our markets or to otherwise fulfill our regulatory obligations could significantly harm our reputation, prompt SEC scrutiny and adversely affect our business and reputation.
Our Nordic and Baltic exchanges monitor trading and compliance with listing standards in accordance with the European Union’s Market Abuse Regulation and other applicable laws. As further described in Note 18, “Commitments, Contingencies and Guarantees” to the consolidated financial statements of this Form 10-K, during 2023, the SFSA initiated a review of the Nasdaq Stockholm exchange regarding the obligation of Nasdaq Stockholm to report suspected market abuse. Any failure to diligently and fairly regulate the Nordic and Baltic exchanges could significantly harm our reputation, prompt scrutiny from regulators and adversely affect our business and reputation.
Laws and regulations regarding security and safeguarding of our systems and services, protection of sensitive customer data and the handling of personal data and information may affect our services or result in increased costs, legal claims or fines against us.
Our business operates certain systems that may be considered “critical infrastructure” under certain regulations and licenses or sells certain systems or services to customers that are used by customers in their role as providers of critical infrastructure or to fulfill certain core business requirements or process certain sensitive data. New cybersecurity regulations may impact the requirements and cost of delivery for impacted systems and services and, in the event of an incident, increase the cost and complexity of our response and the potential financial and reputation impact from fines or private litigation. These regulations may also impact customer decision making and conditions on contracting for our services.
Our businesses and internal operations rely on the processing of data in many jurisdictions and the movement of data, including personal data, across national borders. Legal and contractual requirements relating to the processing, including, but not limited to, collection, storage, handling, use, disclosure, transfer and security, of personal data continue to evolve and regulatory scrutiny and customer requirements in this area are increasing around the world. Significant uncertainty exists as privacy and data protection laws may be interpreted and applied differently across jurisdictions and may create inconsistent or conflicting requirements with privacy and other laws to which we are subject.
Laws and regulations such as the European Union and United Kingdom General Data Protection Regulation, the California Privacy Rights Act and other comparable laws and regulations adopted globally and within the United States and Canada can apply to our processing of their residents’ personal data by Nasdaq legal entities regardless of the location of such entities; such laws may also require our customers located in such jurisdictions to contractually obligate our compliance.
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In addition to directly applying to some of our business activities, these laws and industry-specific regulations, such as the Health Insurance Portability and Accountability Act and the Gramm Leach Bliley Act, impact many of our customers, which may affect their decisions to purchase our services. As a supplier to such customers, regulators may engage in direct enforcement actions or seek to impose liability on us if we do not comply with applicable regulations. Our efforts to comply with privacy and data protection laws may entail substantial expenses, may divert resources from other initiatives and projects, and could impact the services that we offer. The enactment of more restrictive laws, rules or regulations, future enforcement actions or investigations, or the creation of new rights to pursue damages could impact us through increased costs or restrictions on our business, and noncompliance could result in regulatory penalties and significant legal liability.
Changes in tax laws, regulations or policies could have a material adverse effect on our financial results.
Changes in tax laws, regulations or policies could result in us having to pay higher taxes, which may reduce our net income, or could adversely affect our ability to continue our capital allocation program or effect strategic transactions in a tax-favorable manner. In addition, such changes, including federal or state financial transaction taxes, may increase the cost of our offerings or services, which may cause our clients to reduce their use of our services.
Some of our subsidiaries are subject to tax in the jurisdictions in which they are organized or operate, and in computing our tax obligation in these jurisdictions, we take various tax positions. We cannot ensure that upon review of these positions, the applicable authorities will agree with our positions. A successful challenge by a tax authority could result in additional taxes imposed on our clients or our subsidiaries.
RISKS RELATED TO INTELLECTUAL PROPERTY AND BRAND REPUTATION
Damage to our reputation or brand name could have a material adverse effect on our businesses.
One of our competitive strengths is our strong reputation and brand name. Various issues may give rise to reputational risk, including issues relating to:
our ability to maintain the security of our data and systems;
the quality and reliability of our technology platforms and systems;
the ability to fulfill our regulatory obligations;
the ability to execute our business plan, key initiatives or new business ventures and the ability to keep up with changing customer demand;
the representation of our business in the media;
the accuracy of our financial statements, other financial and statistical information or ESG-related disclosures;
the accuracy of our financial guidance or other information provided to our investors;
the quality of our corporate governance structure;
the quality of our products the reliability of our solutions and the accuracy of our information and data offerings;
the quality of our disclosure controls or internal controls over financial reporting, including any failures in supervision;
extreme price volatility on our markets;
any negative publicity surrounding our listed companies or our listing rules;
any negative publicity surrounding the use of our products and/or services by our customers, including in connection with emerging asset classes such as crypto assets; and
any misconduct, fraudulent activity or theft by our employees or other persons formerly or currently associated with us.
Negative publicity or misrepresentations by third parties, particularly on social media, may adversely impact our credibility as a leader in the global capital markets and as a source for data and analytics. This may have an adverse effect on our brands, business and operating results. Damage to our reputation could cause some issuers not to list their securities on our exchanges or switch to a different exchange. Reputational damage may also reduce trading volumes or values on our exchanges or cause us to lose customers. This may have a material adverse effect on our business, financial condition and operating results.
Failure to meet customer expectations or deadlines for the implementation of our products could result in negative publicity, losses and reduced sales, each of which may harm our reputation, business and results of operations.
We generally mutually agree with our customers on the duration, budget and costs associated with the implementation of certain of our products, particularly our market technology large-scale market infrastructure projects. Various factors may cause implementations to be delayed, inefficient or otherwise unsuccessful, including due to unforeseen project complexities, our deployment of insufficient resources or other external factors. The effects of a failure to meet an implementation schedule could include monetary credits for current or future service engagements, a reduction in fees for the project, or the expenditure of additional expenses to mitigate such delays. In addition, time-consuming implementations may also increase the personnel we must allocate to such customer, thereby increasing our costs and diverting attention from other projects. Unsuccessful, lengthy, or costly customer implementation projects could result in claims from customers, decreased customer satisfaction, harm to our reputation, and opportunities for competitors to displace us, each of which could have an adverse effect on our reputation, business and results of operations.
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Our reputation or business could be negatively impacted by ESG matters and our reporting of such matters.
We communicate certain ESG-related initiatives, goals, and/or commitments regarding environmental matters, social matters, vendors and suppliers and other matters in our annual Sustainability Report, Task Force on Climate-related Financial Disclosures, on our website, in our filings with the SEC and elsewhere. These initiatives, goals, or commitments, such as our commitment to achieve net-zero for Scope 3 greenhouse gas emissions by 2050, could be difficult to achieve and costly to implement. We could fail to achieve, or be perceived to fail to achieve, these initiatives, goals, or commitments. In addition, we could be criticized for the timing, scope or nature of these initiatives, goals, or commitments, or for any revisions to them. We could be subject to litigation or regulatory enforcement actions regarding the accuracy, adequacy, or completeness of our ESG-related disclosures. Our actual or perceived failure to achieve our ESG-related initiatives, goals, or commitments could negatively impact our reputation or otherwise materially harm our business.
Failure to protect our intellectual property rights, or allegations that we have infringed on the intellectual property rights of others, could harm our brand-building efforts and ability to compete effectively.
To protect our intellectual property rights, we rely on a combination of trademark laws, copyright laws, patent laws, trade secret protection, confidentiality agreements and other contractual arrangements with our affiliates, clients, strategic partners, employees and others. However, the efforts we have taken to protect our intellectual property and proprietary rights might not be sufficient, or effective, at stopping unauthorized use of those rights. We may be unable to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.
We have registered, or applied to register, our trademarks in the United States and in over 50 foreign jurisdictions and have pending U.S. and foreign applications for other trademarks. We also maintain copyright protection for software products and pursue patent protection for inventions developed by us. We hold a number of patents, patent applications and licenses in the United States and other foreign jurisdictions. However, effective trademark, copyright, patent and trade secret protection might not be available or cost-effective in every country in which we offer our services and products. Moreover, changes in patent law, regulation or practices at the U.S. Patent and Trademark Office and/or analogous offices in other jurisdictions, such as changes in the law regarding patentable subject matter, could also impact our ability to obtain patent protection for our innovations. The scope of protection under our patents may not be sufficient in some cases, or existing patents may be deemed invalid or unenforceable. Failure to protect our intellectual property adequately could harm our brand and affect our ability to compete effectively. Further, defending
our intellectual property rights could result in the expenditure of significant financial and managerial resources.
Third parties may assert intellectual property rights claims against us, which may be costly to defend, could require the payment of damages and could limit our ability to use certain technologies, trademarks or other intellectual property. Any intellectual property claims, with or without merit, could be expensive to litigate or settle and could divert management resources and attention. Successful challenges against us could require us to modify or discontinue our use of technology or business processes where such use is found to infringe or violate the rights of others, or require us to purchase licenses from third parties, any of which could adversely affect our business, financial condition and operating results.
GENERAL RISK FACTORS
We are a holding company that depends on cash flow from our subsidiaries to meet our obligations, and any restrictions on our subsidiaries’ ability to pay dividends or make other payments to us may have a material adverse effect on our results of operations and financial condition.
As a holding company, we require dividends and other payments from our subsidiaries to meet cash requirements. Minimum capital requirements mandated by regulatory authorities having jurisdiction over some of our regulated subsidiaries indirectly restrict the amount of dividends that can be paid upstream.
If our subsidiaries are unable to pay dividends and make other payments to us when needed, or if regulators or counterparties require us to increase capital deployed in certain of our regulated subsidiaries, we may be unable to satisfy our obligations, which would have a material adverse effect on our business, financial condition and operating results.
We may experience fluctuations in our operating results, which may adversely affect the market price of our common stock.
Our industry is risky and unpredictable and is directly affected by many national and international factors beyond our control, including:
economic, political and geopolitical market conditions;
natural disasters, terrorism, pandemics, war or other catastrophes;
broad trends in finance and technology;
changes in price levels and volatility in the stock markets;
the level and volatility of interest rates;
volatility in commodity markets, including the energy markets;
inflation;
disruptions or delays in our supply chains;
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changes in government monetary or tax policy;
the imposition of governmental economic sanctions on countries in which we do business or where we plan to expand our business; and
the perceived attractiveness of the U.S. or European capital markets.
Any one of these factors could have a material adverse effect on our business, financial condition and operating results by causing a substantial decline in the financial services markets and reducing trading volumes or values.
Additionally, since borrowings under our credit facilities bear interest at variable rates and commercial paper is issued at prevailing interest rates, any increase in interest rates on debt that we have not fixed using interest rate hedges will increase our interest expense, reduce our cash flow or increase the cost of future borrowings or refinancings. Other than variable rate debt, we believe our business has relatively large fixed costs and low variable costs, which magnifies the impact of revenue fluctuations on our operating results. As a result, a decline in our revenue may lead to a relatively larger impact on operating results. A substantial portion of our operating expenses is related to personnel costs, regulation and corporate overhead, none of which can be adjusted quickly and some of which cannot be adjusted at all. Our operating expense levels are based on our expectations for future revenue. If actual revenue is below management’s expectations, or if our expenses increase before revenues do, both revenues less transaction-based expenses and operating results would be materially and adversely affected. Because of these factors, it is possible that our operating results or other operating metrics may fail to meet the expectations of stock market analysts and investors. If this happens, the market price of our common stock may be adversely affected.
Our operational processes are subject to the risk of error, which may result in financial loss or reputational damage.
We have instituted extensive controls to reduce the risk of error inherent in our operations; however, such risk cannot completely be eliminated. Our businesses are highly dependent on our ability to process and report, on a daily basis, a large number of transactions across numerous and diverse markets. Some of our operations require complex processes, and the introduction of new products or services or changes in processes or reporting due to regulatory requirements may result in an increased risk of errors for a period after implementation. Additionally, the likelihood of such errors or vulnerabilities is heightened as we acquire new products from third parties, whether as a result of acquisitions or otherwise.
Data, other content or information that we distribute may contain errors or be delayed, causing reputational harm. Use of our products and services as part of the investment process creates the risk that clients, or the parties whose assets are managed by our clients, may pursue claims against us in the event of such delay or error, and significant litigation against us might unduly burden management, personnel, financial and other resources.
In addition, the sophisticated software we sell to our customers may contain undetected errors or vulnerabilities, some of which may be discovered only after delivery, or could fail to perform its intended purpose. Because our clients depend on our solutions for critical business functions, any service interruptions, failures or other issues may result in lost or delayed market acceptance and lost sales, or negative customer experiences that could damage our reputation, resulting in the loss of customers, loss of revenues and liability for damages, which may adversely affect our business, operating results and financial condition.
Climate change may have a long-term adverse impact on our business, and climate and ESG-related disclosure requirements may reduce demand for listings on our exchanges.
While we seek to mitigate our business risks associated with climate change by establishing robust environmental and sustainability programs, there are inherent climate related risks wherever our business is conducted. There is an increased focus from our regulators, investors, clients, employees, and other stakeholders concerning corporate citizenship and sustainability matters. Access to clean water and reliable energy in the communities where we conduct our business, whether for our offices, data centers, vendors, clients or other stakeholders, is a priority. For example, changes in weather where we operate may increase the costs of powering and cooling our data centers or the facilities that we use to operate our exchanges and clearinghouses, develop our products or provide cloud-based services. Climate related events, including extreme weather events and their impact on the critical infrastructure in the United States and elsewhere, have the potential to disrupt our business or the business of our clients; cause increased volatility in commodity markets in which Nasdaq Clearing operates as a clearinghouse, which may result in Nasdaq Clearing holding insufficient collateral for such volatility; lead to an increase in costs of raw materials, which may adversely affect certain of our listed companies operating in certain sectors and create adverse market conditions, including trading volatility beyond historical levels, any of which could adversely affect our business, reputation, financial condition and operating results. Additionally, if the SEC or other federal, state or international regulatory agencies impose comprehensive reporting obligations regarding climate change on U.S. public companies, there may be a decrease in new listings or an increase in delistings of our listed companies, which may adversely affect our business, financial condition and operating results. Such new regulations, whether in the U.S.
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or in other countries in which we operate, could also cause us to incur additional compliance and reporting costs.
Our businesses operate in various international markets, which are subject to political, economic and social uncertainties.
Our businesses operate in various international markets, including but not limited to Northern Europe, the Baltics, the Middle East, Latin America, Africa and Asia, and our non-U.S. operations are subject to the risk inherent in the international environment. Political, economic or social events or developments in one or more of our non-U.S. locations or in the U.S. arising from such international developments, such as limitations imposed on securing new listings on our exchanges or restrictions on entering into transactions with new or existing customers, could adversely affect our sales, operations and financial results. Some locations, such as Lithuania, India, the Philippines and in other emerging markets, have economies that may be subject to greater political, economic and social uncertainties than countries with more developed institutional structures, which may increase our operational risk.
Unforeseen or catastrophic events could interrupt our critical business functions. In addition, our U.S. and European businesses are heavily concentrated in particular areas and may be adversely affected by events in those areas.
We may incur losses as a result of unforeseen or catastrophic events, such as terrorist attacks, natural disasters, pandemics, extreme weather, fire, power loss, telecommunications failures, human error, theft, sabotage and vandalism. Given our position in the global capital markets, we may be more likely than other companies to be a target for malicious disruption activities.
In addition, our U.S. and European business operations are heavily concentrated in the east coast of the U.S., and Stockholm, Sweden, respectively. Any event that impacts either of those geographic areas could potentially affect our ability to operate our businesses.
We have disaster recovery and business continuity plans and capabilities for critical systems and business functions to mitigate the risk of an interruption. Any interruption in our critical business functions or systems could negatively impact our financial condition and operating results. Additionally, some colocation customers may lack adequate disaster recovery solutions to avoid loss of trade flow from a sustained interruption of our critical systems.
Because we have operations in numerous countries, we are exposed to currency risk.
We have operations in the U.S., the Nordic and Baltic countries, Canada, the United Kingdom, Australia and many other foreign countries. We therefore have significant exposure to exchange rate movements between the Euro, Swedish Krona, the Canadian dollar and other foreign currencies against the U.S. dollar. Significant inflation or disproportionate changes in foreign exchange rates with respect to one or more of these currencies could occur as a result of general economic conditions, acts of war or terrorism, changes in governmental monetary or tax policy, changes in local interest rates or other factors. These exchange rate differences will affect the translation of our non-U.S. results of operations, interest expense and financial condition into U.S. dollars as part of the preparation of our consolidated financial statements.
If our risk management methods are not effective, our business, reputation and financial results may be adversely affected.
We utilize widely-accepted methods to identify, assess, monitor and manage our risks, including oversight of risk management by Nasdaq’s Global Risk Management Committee, which comprises senior executives and has the responsibility for regularly reviewing risks and referring significant risks to the board of directors or specific board committees. Local risk management committees in our international offices provide local risk oversight and escalation to local boards, as appropriate. Certain risk management methods require subjective evaluation of dynamic information regarding markets, customers or other matters. That variable information may not in all cases be accurate, complete, up-to-date or properly evaluated. If we do not successfully identify, assess, monitor or manage the risks to which we are exposed, our business, reputation, financial condition and operating results could be materially adversely affected.
Decisions to declare future dividends on our common stock will be at the discretion of our board of directors and there can be no guarantee that we will pay future dividends to our stockholders.
Our board of directors regularly declares quarterly cash dividend payments on our outstanding common stock. Future declarations of dividends and the establishment of future record and payment dates are subject to approval by Nasdaq’s board of directors. The board’s determination to declare dividends will depend upon our profitability and financial condition, contractual restrictions, restrictions imposed by applicable law and other factors that the board deems relevant. Based on an evaluation of these factors, the board may determine not to declare future dividends at all or to declare future dividends at a reduced amount.
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Provisions of our certificate of incorporation, by-laws, exchange rules (including provisions included to address SEC concerns) and governing law restrict the ownership and voting of our common stock. In addition, such provisions could delay or prevent a change in control of us and entrench current management.
Our organizational documents place restrictions on the voting rights of certain stockholders. The holders of our common stock are entitled to one vote per share on all matters to be voted upon by the stockholders except that no person may exercise voting rights in respect of any shares in excess of 5% of the then outstanding shares of our common stock. Any change to the 5% voting limitation would require SEC approval.
In response to the SEC’s concern about a concentration of our ownership, the rules of some of our exchange subsidiaries include a prohibition on any member or any person associated with a member of the exchange from beneficially owning more than 20% of our outstanding voting interests. SEC consent would be required before any investor could obtain more than a 20% voting interest in us. The rules of some of our exchange subsidiaries also require the SEC’s approval of any business ventures with exchange members, subject to exceptions.
Our organizational documents contain provisions that may be deemed to have an anti-takeover effect and may delay, deter or prevent a change of control of us, such as a tender offer or takeover proposal that might result in a premium over the market price for our common stock. Additionally, certain of these provisions make it more difficult to bring about a change in the composition of our board of directors, which could result in entrenchment of current management.
Our certificate of incorporation and by-laws:
do not permit stockholders to act by written consent;
require certain advance notice for director nominations and actions to be taken at annual meetings; and
authorize the issuance of undesignated preferred stock, or “blank check” preferred stock, which could be issued by our board of directors without stockholder approval.
Section 203 of the Delaware General Corporation Law imposes restrictions on mergers and other business combinations between us and any holder of 15% or more (or, in some cases, a holder who previously held 15% or more) of our common stock. In general, Delaware law prohibits a publicly held corporation from engaging in a “business combination” with an “interested stockholder” for three years after the stockholder becomes an interested stockholder, unless the corporation’s board of directors and stockholders approve the business combination in a prescribed manner.
Finally, many of the European countries where we operate regulated entities require prior governmental approval before an investor acquires 10% or greater of our common stock.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk management and strategy
Nasdaq’s brand and role as a critical infrastructure provider for global financial markets, and operator of the Nasdaq Stock Market, make us an attractive target for cybersecurity risks, including from international political opponents, hacktivists and ransomware or other financially motivated criminals targeting the financial sector. Our cybersecurity risks include financial and reputational damage, along with collateral damage from loss of customer confidence in our exchange, products or offerings, as applicable, potential regulatory enforcement actions or litigation, either from governmental authorities or shareholders, or the failure to comply with contractual breach notifications. To date, no risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our business, our business strategy, our results of operations or financial condition. For further information, see “Our role in the global marketplace positions us at greater risk for a cyberattack” and “Expanded cybersecurity regulations, and increased cybersecurity infrastructure and compliance costs, may adversely impact our results of operations” in “Item 1A, Risk Factors” of this Annual Report on Form 10-K.
Our risk management and mitigation approach includes the adoption of security controls and adaptive ongoing threat analysis. Our policies and our baseline security controls incorporate robust security infrastructure, risk-based controls and multi- layered defense systems. We have 16 System and Organization Controls Type 2, or SOC 2, certifications with respect to our information security and infrastructure. Our adaptive analysis monitors the threat landscape relevant to Nasdaq, our vendors and financial industry peers, and threats arising from geopolitical events. As the external threat landscape evolves, our information security controls are regularly evaluated, updated and enhanced to help protect against emerging risks. Additionally, we conduct extensive cybersecurity assessments of our acquired entities, both prior to acquisition and following completion of the transaction, to understand potential threats and mitigate any potential security gaps, as well as to ensure compliance with our security infrastructure and access management practices and policies.
We periodically engage external advisors to perform an analysis of our information security procedures, which include a review of program documentation and an overall maturity assessment of Nasdaq’s information security programs. These advisors provide recommendations to further enhance our procedures. The findings are then presented to the Audit & Risk Committee of the Board of Directors, or the Audit & Risk Committee. In 2023, our management team and the Board of Directors conducted tabletop exercises and simulations in cybersecurity matters with assistance from internal and outside experts.
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We use certain cloud-based third-party vendors for the core trading systems of certain of our exchanges and certain of our governance products and solutions. Prior to engaging such vendors, we analyze each provider’s SOC2 certifications and perform due diligence and testing for information security and interoperability with our systems, and annually review the SOC2 certifications. Our security assurance and threat assessment team, within our Information Security organization, collaborates with our external threat intelligence providers to proactively review Nasdaq, and our vendors with respect to emerging threats and associated risks.
For our third-party service providers, our risk assessment process evaluates the probability and potential impact of incidents related to operational errors, technology disruptions, information security breaches, workforce issues, internal and external fraud, financial actions, and legal and regulatory matters. This assessment process is part of our Supplier Risk Management program, which establishes processes for identifying, assessing, and periodically reviewing our exposure to risk through third party vendors.
Governance
Cybersecurity is an integral part of risk management at Nasdaq. The Board of Directors appreciates the rapidly evolving nature of threats presented by cybersecurity incidents and is committed to the prevention, timely detection, and mitigation of the effect any such incidents may have on us. We use a cross-departmental approach to assess and manage cybersecurity risk, with our Information Security; Legal, Risk and Regulatory; and Internal Audit functions presenting on key topics to the Audit & Risk Committee, which provides oversight of our cybersecurity risk. Additionally, members from these organizations, along with Finance and Accounting, comprise a rapid response team that would mobilize in the event of a significant cybersecurity incident and would analyze and evaluate the incident while also advising the executive management team. Our Global Risk Management Committee, which includes our Chair and CEO and other senior executives, assists the Board of Directors in its cybersecurity risk oversight role.
Our Audit & Risk Committee receives quarterly or, if needed, more frequent reports on cybersecurity and information security matters from our Chief Information Security Officer, or CISO, and his team. The CISO has more than 25 years of experience in information technology and information security, particularly in the financial services industry, and our Information Security organization has more than 100 members, with expertise in application security; governance and compliance; program and vulnerability management; security engineering; security operations security assurance; and threat intelligence and security architecture.
This regular reporting to the Audit & Risk Committee also includes a cybersecurity dashboard that contains information on cybersecurity governance processes, and from time to time, also includes the status of projects to strengthen internal cybersecurity, ongoing prevention and mitigation efforts, security features of the products and services we provide our customers, or the results of security events during the period. The Audit & Risk Committee also reviews and discusses recent cyber incidents affecting the industry and the emerging threat landscape.
Cybersecurity is a shared responsibility, and our goal is for all employees to be vigilant in helping to protect our organization and themselves, at all times. We routinely perform simulations and tabletop exercises, and incorporate external resources and advisors as needed, to help strengthen our cybersecurity protection and information security procedures and safeguards. All employees are required to complete annual cybersecurity awareness training and have access to continuous cybersecurity educational opportunities throughout the year. Nasdaq also maintains a cybersecurity and information security risk insurance policy, and our Nasdaq Information Security Management System conforms to ISO 27001 requirements and is ISO 27001 certified.
On an annual basis, the Information Security team reviews and updates its governance documents, including the Information Security Charter, the Information Security Policy, and the Information Security Program Plan, and then presents the revised documents to the Audit & Risk Committee for review and/or approval. Additionally, the Information Security team maintains a formal cybersecurity strategic three-year plan, which outlines the strategic vision and associated goals for the cybersecurity of our global operations. The plan is regularly updated with new initiatives that align with technology innovations and changes in the threat landscape, and is reviewed and approved by the CISO and the Audit & Risk Committee. Throughout the three-year plan term, the CISO regularly provides management with progress reports.
Item 2. Properties
We conduct our business operations in leased facilities. We do not own any real property. Our U.S. headquarters are located in New York, New York, and our European headquarters are located in Stockholm, Sweden. We also lease space in multiple locations around the world, which are used for research and development, sales and support, and administrative activities, as well as for data centers and disaster preparedness facilities.
Generally, our properties are not allocated for use by a particular segment. Instead, most of our properties are used by two or more segments. We regularly monitor the facilities we occupy to ensure that they suit our needs in a hybrid work environment. We believe the facilities that we occupy are adequate for the purposes for which they are currently used and are well-maintained. See Note 16, “Leases,” to the consolidated financial statements for further discussion.
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Item 3. Legal Proceedings
For a description of our legal proceedings, if any, see “Legal and Regulatory Matters” of Note 18, “Commitments, Contingencies and Guarantees,” to the consolidated financial statements, which is incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Purchases of Equity Securities
Market Information
Our common stock is listed on The Nasdaq Stock Market under the ticker symbol “NDAQ.” As of February 13, 2024, we had approximately 202 holders of record of our common stock.
Issuer Purchases of Equity Securities
Share Repurchase Program
See “Share Repurchase Program,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of our share repurchase program.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The table below represents repurchases made by or on behalf of us or any “affiliated purchaser” of our common stock during the fiscal quarter ended December 31, 2023:
Period(a)
Total Number of Shares Purchased
(b) Average Price Paid Per Share(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
October 2023   
Share repurchase program— $— — $2,000 
Employee transactions19,360 $48.85  N/A N/A
November 2023
Share repurchase program1,751,513 $52.36 1,751,513 $1,908 
Employee transactions— $—  N/A N/A
December 2023
Share repurchase program333,261 $54.44 333,261 $1,890 
Employee transactions17,883 $56.22  N/A N/A
Total Quarter Ended December 31, 2023
Share repurchase program2,084,774 $52.69 2,084,774 $1,890 
Employee transactions37,243 $52.39  N/AN/A
In the preceding table:
N/A - Not applicable.
See “Share Repurchase Program,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further discussion of our share repurchase program. 
Employee transactions represents shares surrendered to us to satisfy tax withholding obligations arising from the vesting of restricted stock and PSUs previously issued to employees.
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PERFORMANCE GRAPH
The following performance graph and related information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference into any of our other filings under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
The following graph compares the total return of our common stock to the Nasdaq Composite Index, the S&P 500 and a peer group selected by us for the past five years. We changed our peer group in the table below to the S&P 500 GICS 4020 Index, or New Peer Group, which is a blend of exchanges, as well as data, financial technology and banking companies to align more closely with Nasdaq’s diverse business and competitors.
Fiscal Year Ended December 31,
201820192020202120222023
Nasdaq, Inc.$100 $134 $169 $270 $240 $231 
Nasdaq Composite Index100 137 198 242 163 236 
S&P 500100 131 156 200 164 207 
New Peer Group
100 125 139 188 167 193 
2022 Peer Group
100 128 153 171 142 170 
The figures represented below assume an initial investment of $100 in the common stock or index at the closing price on December 31, 2018 and the reinvestment of all dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Nasdaq, Inc., the Nasdaq Composite Index, the S&P 500 and Peer Groups

868

The prior peer group, collectively referred to as the 2022 Peer Group, was comprised of the following companies:
2022 Peer Group
ASX LimitedDeutsche Börse AGLSE
B3 S.A.
Euronext N.V.Singapore Exchange Limited
Bolsas Mexicana de Valores, S.A.B. de C.V.Hong Kong Exchanges and Clearing LimitedTMX Group Limited
CboeICE
CME Group Inc.Japan Exchange Group, Inc.
36


Item 6. [Reserved]
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the financial condition and results of operations of Nasdaq refers to the year-over-year comparison for the fiscal years ended December 31, 2023 and December 31, 2022 and should be read in conjunction with our consolidated financial statements and related notes included in this Form 10-K, as well as the discussion under “Item 1A. Risk Factors.” For further discussion of our growth strategy, products and services, and competitive strengths, see “Item 1. Business.”
Discussion of fiscal year 2022 items and the year-over year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended December 31, 2022 and December 31, 2021 can be found in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was previously filed with the SEC on February 23, 2023. For the Financial Technology segment, which was impacted by the new divisional structure subsequent to the Adenza acquisition, the comparisons presented in this discussion and analysis also include the year-over-year comparison of results of operations for the fiscal years ended December 31, 2022 and December 31, 2021.
Business Segments
Our organizational structure aligns our businesses with the foundational shifts that are driving the evolution of the global financial system. Following the acquisition of Adenza, we further refined the divisional structure into Capital Access Platforms, Financial Technology and Market Services reportable segments. All prior periods have been restated to conform to the current period presentation. See Note 1, “Organization and Nature of Operations,” and Note 19, “Business Segments,” to the consolidated financial statements for further discussion of our reportable segments and geographic data, as well as how management allocates resources, assesses performance and manages these businesses as three separate segments. See “Part I, Item 1. Business” for additional discussion on recent developments and highlights.
Nasdaqs Operating Results
The following tables summarize our financial performance for the year ended December 31, 2023 compared to the same period in 2022 and for the year ended December 31, 2022 when compared to the same period in 2021. The comparability of our results of operations between reported periods is impacted by the acquisition of Adenza in November 2023. See “2023 Acquisition,” of Note 4, “Acquisitions,” to the consolidated financial statements for further discussion. For a detailed discussion of our results of operations, see “Segment Operating Results” below.
 
Year Ended December 31,
Percentage Change
 202320222021
2023 vs. 2022
2022 vs. 2021
 (in millions, except per share amounts)  
Revenues less transaction-based expenses$3,895 $3,582 $3,420 8.7 %4.7 %
Operating expenses2,317 2,018 1,979 14.8 %2.0 %
Operating income1,578 1,564 1,441 0.9 %8.5 %
Net income attributable to Nasdaq$1,059 $1,125 $1,187 (5.9)%(5.2)%
Diluted earnings per share$2.08 $2.26 $2.35 (8.0)%(3.8)%
Cash dividends declared per common share$0.86 $0.78 $0.70 10.3 %11.4 %
In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average exchange rates. Impacts on our revenues less transaction-based expenses and operating income associated with fluctuations in foreign currency are discussed in more detail under “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.”
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The following chart summarizes our ARR (in millions):
59
ARR for a given period is the current annualized value derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature, or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. For Adenza recurring revenue contracts, the amount included in ARR is consistent with the amount that we invoice the customer during the current period. Additionally, for Adenza recurring revenue contracts that include annual values that increase over time, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include the future committed increases in the contract value as of the date of the ARR calculation. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
The ARR chart includes:
Proprietary market data subscriptions and annual listing fees within our Data & Listing Services business, index data subscriptions and guaranteed minimum on futures contracts within our Index business and subscription contracts under our Workflow & Insights business.
SaaS subscription and support contracts related to Verafin, surveillance, market technology, AxiomSL, Calypso and trade management services, excluding one-time service requests.
The following chart summarizes our quarterly annualized SaaS revenues for Solutions, which comprises our Capital Access Platforms and Financial Technology segments, for December 31, 2023, 2022 and 2021 (in millions):
1272
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Segment Operating Results
The following table presents our revenues by segment:
 Year Ended December 31,Percentage Change
 202320222021
2023 vs. 2022
2022 vs. 2021
 (in millions) 
Capital Access Platforms$1,770$1,682$1,5665.2 %7.4 %
Financial Technology1,099 864 772 27.2 %11.9 %
Market Services, net
987 988 1,005 (0.1)%(1.7)%
Other revenues39 48 77 (18.8)%(37.7)%
Total revenues less transaction-based expenses
$3,895 $3,582 $3,420 8.7 %4.7 %
The following chart presents our Capital Access Platforms, Financial Technology and Market Services segments as a percentage of our total revenues, less transaction-based expenses. 398
CAPITAL ACCESS PLATFORMS
The following table presents revenues from our Capital Access Platforms segment:
 Year Ended December 31,Percentage Change
 202320222021
2023 vs. 2022
2022 vs. 2021
 (in millions) 
Data & Listing Services$749 $727 $678 3.0 %7.2 %
Index528 486 459 8.6 %5.9 %
Workflow & Insights493 469 429 5.1 %9.3 %
Total Capital Access Platforms$1,770 $1,682 $1,566 5.2 %7.4 %
Data & Listing Services Revenues
The following table presents key drivers from our Data & Listing Services business:
Year Ended December 31,
202320222021
IPOs
The Nasdaq Stock Market - operating companies
103 87 319
The Nasdaq Stock Market - SPACs
27 74 433
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic38 174
Total new listings
The Nasdaq Stock Market330 366 1,000 
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic23 63 207
Number of listed companies
The Nasdaq Stock Market4,044 4,230 4,178 
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic1,218 1,251 1,235 
As of December 31,
202320222021
ARR (in millions)
$682 $664 $627 
In the tables above:
Number of total listed companies on The Nasdaq Stock Market for the years ended December 31, 2023, 2022 and 2021 included 600, 528 and 441 ETPs, respectively.
IPOs, new listings (which includes IPOs) and total listed companies for exchanges that comprise Nasdaq Nordic and Nasdaq Baltic represent companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North.
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Data & Listing Services revenues increased in 2023 compared with 2022 primarily due to an increase in proprietary data revenues driven largely by higher international demand and annual listing fee growth, partially offset by lower initial listings fees.
Index Revenues
The following table presents key drivers from our Index business:
As of or
Three Months Ended December 31,
202320222021
Number of licensed ETPs388 379 362
TTM change in period end ETP AUM tracking Nasdaq indices (in billions)
Beginning balance$315 $424 $359 
Net appreciation (depreciation) 128 (142)83 
Net impact of ETP sponsor switches(1)(1)(92)
Net inflows31 34 74 
Ending balance$473 $315 $424 
Quarterly average ETP AUM tracking Nasdaq indices (in billions)
$436 $326 $400 
ARR$72 $68 $67 
In the table above, TTM represents trailing twelve months.
Index revenues increased in 2023 compared with 2022 primarily due to higher AUM in exchange traded products linked to Nasdaq indices.
Workflow & Insights Revenues
The following table presents key drivers from our Workflow & Insights business:
As of or
Three Months Ended December 31
202320222021
(in millions)
ARR$481 $458 $417 
Quarterly annualized SaaS revenues411 388 356 
Workflow & Insights revenues increased in 2023 compared with 2022 due to an increase in both analytics and corporate solutions revenues. The increase in analytics revenues was primarily due to the growth in our eVestment and Solovis product offerings. The increase in our corporate solutions revenues was primarily due to continued demand for our ESG solutions.
FINANCIAL TECHNOLOGY
The following table presents revenues from our Financial Technology segment:
 Year Ended December 31,Percentage Change
 20232022
2021
2023 vs. 2022
2022 vs. 2021
 (in millions) 
Financial Crime Management Technology
$223 $176 $104 26.7 %69.2 %
Regulatory Technology
212 130 127 63.1 %2.4 %
Capital Markets Technology
664 558 541 19.0 %3.1 %
Total Financial Technology$1,099 $864 $772 27.2 %11.9 %
Financial Crime Management Technology Revenues
The following table presents key drivers for Financial Crime Management Technology business:
As of or
Twelve Months Ended December 31,
202320222021
(in millions)
ARR$226 $182 $149 
Quarterly annualized SaaS revenues226 182 149 
Financial Crime Management Technology revenues increased in 2023 compared with 2022 and 2022 compared with 2021 due to an increase in demand related to new sales to existing clients and new customer acquisitions. The 2022 increase was also driven by a $28 million purchase price adjustment from the Verafin acquisition on deferred revenue in 2021 and the inclusion of a full year of Verafin revenues in 2022.
Regulatory Technology Revenues
The following table presents key drivers for Regulatory Technology business:
As of or
Twelve Months Ended December 31,
202320222021
(in millions)
ARR$325 $130 $120 
Quarterly annualized SaaS revenues165 116 104 
Regulatory Technology revenues increased in 2023 compared with 2022 primarily due to the inclusion of revenues from our acquisition of Adenza and strong performance from our surveillance offerings in new sales to existing clients and new customer acquisitions. The strong performance of our surveillance offerings was also the key driver of the increase in 2022 compared with 2021.
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Capital Markets Technology Revenues
The following table presents key drivers for Capital Markets Technology business:
As of or
Three Months Ended December 30,
202320222021
(in millions)
ARR $799 $499 $475 
Quarterly annualized SaaS revenues108 39 31 
Capital Markets Technology revenues increased in 2023 compared with 2022 and 2022 compared with 2021. The increase in 2023 was primarily due to the inclusion of revenues from our acquisition of Adenza, higher trade management services revenues mainly driven by demand for colocation and connectivity services and higher market technology revenues due to higher support revenues and higher professional services fees. The increase in 2022 was primarily due to higher trade management services revenues associated with increased demand for connectivity services, partially offset by lower market technology revenues. The decrease in market technology revenues in 2022 was due to the successful completion of long-term contracts in 2021 and the unfavorable impact of changes in foreign exchange rates of $10 million, partially offset by growth in SaaS-based revenues.
MARKET SERVICES
The following table presents revenues from our Market Services segment:
 Year Ended December 31,Percentage Change
 20232022
2021
2023 vs. 2022
2022 vs. 2021
 (in millions) 
Market Services
$3,156 $3,632 $3,471 (13.1)%4.6 %
Transaction-based expenses:
Transaction rebates(1,838)(2,092)(2,168)(12.1)%(3.5)%
Brokerage, clearance and exchange fees
(331)(552)(298)(40.0)%85.2 %
Total Market Services, net
$987 $988 $1,005 (0.1)%(1.7)%
Our Market Services segment includes equity derivatives trading, cash equity trading, Nordic fixed income trading & clearing, U.S. Tape plans and other revenues. The following tables present net revenues by product from our Market Services segment:
 Year Ended December 31,Percentage Change
 202320222021
2023 vs. 2022
2022 vs. 2021
 (in millions)
U.S. Equity Derivative Trading$374 $371 $343 0.8 %8.2 %
Cash Equity Trading397 397 429 — %(7.5)%
U.S. Tape plans141 149 155 (5.4)%(3.9)%
Other75 71 78 5.6 %(9.0)%
Total Market Services, net
$987 $988 $1,005 (0.1)%(1.7)%
In the table above, Other includes Nordic fixed income trading & clearing, Nordic derivatives and Canadian cash equities trading.
U.S. Equity Derivative Trading
The following tables present total revenues, transaction-based expenses, and total revenues less transaction-based expenses as well as key drivers from our U.S. Equity Derivative Trading business:
 Year Ended December 31,Percentage Change
 20232022
2021
2023 vs. 2022
2022 vs. 2021
 (in millions)
U.S. Equity Derivative Trading Revenues$1,257 $1,252 $1,367 0.4 %(8.4)%
Section 31 fees
55 89 32 (38.2)%178.1 %
Transaction-based expenses:  
Transaction rebates(879)(878)(1,018)0.1 %(13.8)%
Section 31 fees
(55)(89)(32)(38.2)%178.1 %
Brokerage and clearance fees(4)(3)(6)33.3 %(50.0)%
U.S. Equity derivative trading revenues, net$374 $371 $343 0.8 %8.2 %
Section 31 fees are recorded as U.S. equity derivative and cash equity trading revenues with a corresponding amount recorded in transaction-based expenses. We are assessed these fees from the SEC and pass them through to our customers in the form of incremental fees. Pass-through fees can increase or decrease due to rate changes by the SEC, our percentage of the overall industry volumes processed on our systems, and differences in actual dollar value traded. Section 31 fees decreased in 2023 compared with 2022 primarily due to lower average SEC fee rates. Since the amount recorded in revenues is equal to the amount recorded as Section 31 fees, there is no impact on our net revenues.
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Year Ended December 31,
 202320222021
U.S. equity options 
Total industry average daily volume (in millions)40.4 38.2 37.2 
Nasdaq PHLX matched market share11.3 %11.6 %12.4 %
The Nasdaq Options Market matched market share6.1 %8.0 %8.1 %
Nasdaq BX Options matched market share3.3 %2.8 %1.4 %
Nasdaq ISE Options matched market share5.9 %5.7 %6.6