Item 1. Consolidated Financial Statements

158K characters. Original on sec.gov · Markdown

Item 1. Consolidated Financial Statements

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Balance Sheets

(In millions, except per share amounts)


	As of		As of December 31, 2021
	June 30, 2022
	(Unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	830	$	607
Short-term restricted cash and cash equivalents	6,045		1,035
Cash and cash equivalent margin deposits and guaranty funds	164,483		145,936
Invested deposits, delivery contracts receivable and unsettled variation margin	3,189		4,493
Customer accounts receivable, net of allowance for doubtful accounts of $25 and $24 at June 30, 2022 and December 31, 2021, respectively	1,371		1,208
Prepaid expenses and other current assets	457		1,021
Total current assets	176,375		154,300
Property and equipment, net	1,703		1,699
Other non-current assets:
Goodwill	21,106		21,123
Other intangible assets, net	13,397		13,736
Long-term restricted cash and cash equivalents	405		398
Other non-current assets	2,221		2,246
Total other non-current assets	37,129		37,503
Total assets	$	215,207	$	193,502

Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities	$	719	$	703
Section 31 fees payable	172		57
Accrued salaries and benefits	220		354
Deferred revenue	473		194
Short-term debt	4		1,521
Margin deposits and guaranty funds	164,483		145,936
Invested deposits, delivery contracts payable and unsettled variation margin	3,189		4,493
Other current liabilities	162		153
Total current liabilities	169,422		153,411
Non-current liabilities:
Non-current deferred tax liability, net	3,945		4,100
Long-term debt	18,109		12,397
Accrued employee benefits	191		200
Non-current operating lease liability	267		252
Other non-current liabilities	412		394
Total non-current liabilities	22,924		17,343
Total liabilities	192,346		170,754
Commitments and contingencies


Equity:
Intercontinental Exchange, Inc. stockholders’ equity:
Preferred stock, $0.01 par value; 100 shares authorized; none issued or outstanding	—		—
Common stock, $0.01 par value; 1,500 shares authorized; 633 and 631 issued at June 30, 2022 and December 31, 2021, respectively, and 558 and 561 shares outstanding at June 30, 2022 and December 31, 2021, respectively	6		6
Treasury stock, at cost; 75 and 70 shares at June 30, 2022 and December 31, 2021, respectively	(6,223)		(5,520)
Additional paid-in capital	14,201		14,069
Retained earnings	15,135		14,350
Accumulated other comprehensive loss	(305)		(196)
Total Intercontinental Exchange, Inc. stockholders’ equity	22,814		22,709
Non-controlling interest in consolidated subsidiaries	47		39
Total equity	22,861		22,748
Total liabilities and equity	$	215,207	$	193,502

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)


	Six Months Ended June 30,				Three Months Ended June 30,
	2022		2021		2022		2021
Revenues:
Exchanges	$	3,247	$	2,942	$	1,604	$	1,336
Fixed income and data services	1,021		926		512		458
Mortgage technology	604		695		297		340
Total revenues	4,872		4,563		2,413		2,134
Transaction-based expenses:
Section 31 fees	174		166		123		41
Cash liquidity payments, routing and clearing	985		893		476		386
Total revenues, less transaction-based expenses	3,713		3,504		1,814		1,707
Operating expenses:
Compensation and benefits	714		719		355		365
Professional services	69		81		35		37
Acquisition-related transaction and integration costs	62		28		53		10
Technology and communication	344		327		169		165
Rent and occupancy	41		41		20		20
Selling, general and administrative	112		111		57		60
Depreciation and amortization	510		506		256		251
Total operating expenses	1,852		1,813		945		908
Operating income	1,861		1,691		869		799
Other income/(expense):
Interest income	9		—		8		—
Interest expense	(264)		(213)		(161)		(106)
Other income/(expense), net	(35)		1,287		23		1,239
Other income/(expense), net	(290)		1,074		(130)		1,133
Income before income tax expense	1,571		2,765		739		1,932
Income tax expense	338		862		173		679
Net income	$	1,233	$	1,903	$	566	$	1,253
Net income attributable to non-controlling interest	(21)		(5)		(11)		(1)
Net income attributable to Intercontinental Exchange, Inc.	$	1,212	$	1,898	$	555	$	1,252
Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:
Basic	$	2.17	$	3.38	$	0.99	$	2.23
Diluted	$	2.16	$	3.36	$	0.99	$	2.22
Weighted average common shares outstanding:
Basic	560		562		558		563
Diluted	562		565		560		565

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)


	Six Months Ended June 30,				Three Months Ended June 30,
	2022		2021		2022		2021
Net income	$	1,233	$	1,903	$	566	$	1,253
Other comprehensive income/(loss):
Foreign currency translation adjustments, net of tax expense/(benefit) of ($1) for both the six and three months ended June 30, 2022 and $1 for the three months ended June 30, 2021	(109)		17		(84)		10
Change in equity method investment	—		1		—		—


Other comprehensive income/(loss)	(109)		18		(84)		10
Comprehensive income	$	1,124	$	1,921	$	482	$	1,263
Comprehensive income attributable to non-controlling interest	(21)		(5)		(11)		(1)
Comprehensive income attributable to Intercontinental Exchange, Inc.	$	1,103	$	1,916	$	471	$	1,262

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest

(In millions)

(Unaudited)


	Intercontinental Exchange, Inc. Stockholders’ Equity												Non- Controlling Interest in Consolidated Subsidiaries		Total Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of December 31, 2021	631	$	6	(70)	$	(5,520)	$	14,069	$	14,350	$	(196)	$	39	$	22,748
Other comprehensive loss	—	—		—	—		—		—		(109)		—		(109)

Exercise of common stock options	—	—		—	—		20		—		—		—		20

Repurchases of common stock	—	—		(4)	(632)		—		—		—		—		(632)
Payments relating to treasury shares	—	—		(1)	(71)		—		—		—		—		(71)
Stock-based compensation	—	—		—	—		88		—		—		—		88
Issuance under the employee stock purchase plan	—	—		—	—		24		—		—		—		24

Issuance of restricted stock	2	—		—	—		—		—		—		—		—

Distributions of profits	—	—		—	—		—		—		—		(13)		(13)
Dividends paid to stockholders	—	—		—	—		—		(427)		—		—		(427)


Net income/(loss) attributable to non-controlling interest	—	—		—	—		—		(21)		—		21		—
Net income	—	—		—	—		—		1,233		—		—		1,233
Balance, as of June 30, 2022	633	$	6	(75)	$	(6,223)	$	14,201	$	15,135	$	(305)	$	47	$	22,861


	Intercontinental Exchange, Inc. Stockholders’ Equity												Non- Controlling Interest in Consolidated Subsidiaries		Total Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of March 31, 2022	633	$	6	(74)	$	(6,064)	$	14,153	$	14,793	$	(221)	$	36	$	22,703
Other comprehensive loss	—	—		—	—		—		—		(84)		—		(84)

Exercise of common stock options	—	—		—	—		5		—		—		—		5

Repurchases of common stock	—	—		(1)	(157)		—		—		—		—		(157)
Payments relating to treasury shares	—	—		—	(2)		—		—		—		—		(2)
Stock-based compensation	—	—		—	—		43		—		—		—		43





Dividends paid to stockholders	—	—		—	—		—		(213)		—		—		(213)


Net income/(loss) attributable to non-controlling interest	—	—		—	—		—		(11)		—		11		—
Net income	—	—		—	—		—		566		—		—		566
Balance, as of June 30, 2022	633	$	6	(75)	$	(6,223)	$	14,201	$	15,135	$	(305)	$	47	$	22,861

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest — (Continued)

(In millions)

(Unaudited)


	Intercontinental Exchange, Inc. Stockholders’ Equity												Non- Controlling Interest in Consolidated Subsidiaries		Total Equity		Redeemable Non-Controlling Interest
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of December 31, 2020	629	$	6	(68)	$	(5,200)	$	13,845	$	11,039	$	(192)	$	36	$	19,534	$	93
Other comprehensive income	—	—		—	—		—		—		18		—		18		—
Exercise of common stock options	—	—		—	—		8		—		—		—		8		—

Payments relating to treasury shares	—	—		—	(67)		—		—		—		—		(67)		—
Stock-based compensation	—	—		—	—		81		—		—		—		81		2
Issuance under the employee stock purchase plan	—	—		—	—		18		—		—		—		18		—
Issuance of restricted stock	2	—		—	—		—		—		—		—		—		—
Distributions of profits	—	—		—	—		—		—		—		(11)		(11)		—
Dividends paid to stockholders	—	—		—	—		—		(374)		—		—		(374)		—

Net income/(loss) attributable to non-controlling interest	—	—		—	—		—		(5)		—		11		6		(6)
Net income	—	—		—	—		—		1,903		—		—		1,903		—
Balance, as of June 30, 2021	631	$	6	(68)	$	(5,267)	$	13,952	$	12,563	$	(174)	$	36	$	21,116	$	89


	Intercontinental Exchange, Inc. Stockholders’ Equity												Non- Controlling Interest in Consolidated Subsidiaries		Total Equity		Redeemable Non-Controlling Interest
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of March 31, 2021	631	$	6	(68)	$	(5,265)	$	13,908	$	11,498	$	(184)	$	31	$	19,994	$	91

Other comprehensive income	—	—		—	—		—		—		10		—		10		—
Exercise of common stock options	—	—		—	—		5		—		—		—		5		—

Payments relating to treasury shares	—	—		—	(2)		—		—		—		—		(2)		—
Stock-based compensation	—	—		—	—		39		—		—		—		39		2





Dividends paid to stockholders	—	—		—	—		—		(187)		—		—		(187)		—



Net income/(loss) attributable to non-controlling interest	—	—		—	—		—		(1)		—		5		4		(4)
Net income	—	—		—	—		—		1,253		—		—		1,253		—
Balance, as of June 30, 2021	631	$	6	(68)	$	(5,267)	$	13,952	$	12,563	$	(174)	$	36	$	21,116	$	89

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Six Months Ended June 30,
	2022		2021
Operating activities:
Net income	$	1,233	$	1,903
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	510		506
Stock-based compensation	76		73
Deferred taxes	(147)		154
Gain on sale of Euroclear investment	(41)		—
Gain on sale of Coinbase investment	—		(1,227)

Net losses/(income) from unconsolidated investees	57		(34)
Other	21		24
Changes in assets and liabilities:
Customer accounts receivable	(177)		(74)
Other current and non-current assets	(48)		(79)
Section 31 fees payable	115		(44)
Deferred revenue	292		279
Other current and non-current liabilities	(166)		126
Total adjustments	492		(296)
Net cash provided by operating activities	1,725		1,607

Investing activities:
Capital expenditures	(70)		(95)
Capitalized software development costs	(134)		(145)
Purchases of invested margin deposits	(1,431)		(1,644)
Proceeds from sales of invested margin deposits	3,815		2,222
Cash paid for acquisitions, net of cash acquired	(36)		(6)

Purchases of equity and equity method investments	(43)		(23)
Proceeds from sale of Euroclear investment	741		—
Proceeds from sale of Coinbase investment	—		1,237
Other	1		(2)


Net cash provided by investing activities	2,843		1,544

Financing activities:


Proceeds from debt facilities, net	5,186		5
Redemption of commercial paper, net	(1,012)		(2,097)
Repurchases of common stock	(632)		—
Dividends to stockholders	(427)		(374)
Change in cash and cash equivalent margin deposits and guaranty funds	16,163		7,780
Payments relating to treasury shares received for restricted stock tax payments and stock option exercises	(71)		(67)



Other	31		15
Net cash provided by financing activities	19,238		5,262
Effect of exchange rate changes on cash and cash equivalents, restricted cash and cash equivalents, and cash and cash equivalent margin deposits and guaranty funds	(19)		—
Net increase in cash and cash equivalents, restricted cash and cash equivalents, and cash and cash equivalent margin deposits and guaranty funds	23,787		8,413
Cash and cash equivalents, restricted cash and cash equivalents, and cash and cash equivalent margin deposits and guaranty funds at beginning of period	147,976		83,619
Cash and cash equivalents, restricted cash and cash equivalents, and cash and cash equivalent margin deposits and guaranty funds at end of period	$	171,763	$	92,032

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

(In millions)

(Unaudited)


	As of June 30, 2022		As of June 30, 2021
Supplemental cash flow disclosure:
Cash paid for income taxes	$	524	$	414
Cash paid for interest	$	226	$	211

Reconciliation of the components of cash and cash equivalents, restricted cash and cash equivalents, and cash and cash equivalent margin deposits and guaranty funds to the balance sheet:
Cash and cash equivalents	$	830	$	602
Short-term restricted cash and cash equivalents	6,045		1,046
Long-term restricted cash and cash equivalents	405		398
Cash and cash equivalent margin deposits and guaranty funds	164,483		89,986
Total	$	171,763	$	92,032

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

**1.**Description of Business

Nature of Business and Organization

We are a provider of market infrastructure, data services and technology solutions to a broad range of customers including financial institutions, corporations and government entities. Our products, which span major asset classes including futures, equities, fixed income and United States, or U.S., residential mortgages, provide our customers with access to mission critical tools that are designed to increase asset class transparency and workflow efficiency.

In our Exchanges segment, we operate regulated marketplaces for the listing, trading and clearing of a broad array of derivatives contracts and financial securities.
In our Fixed Income and Data Services segment, we provide fixed income pricing, reference data, indices, analytics and execution services as well as global credit default swap, or CDS, clearing and multi-asset class data delivery solutions.
In our Mortgage Technology segment, we provide an end-to-end technology platform that offers customers comprehensive, digital workflow tools that aim to address the inefficiencies that exist in the U.S. residential mortgage market, from application through closing and the secondary market.

We operate marketplaces, technology and provide data services in the U.S., United Kingdom, or U.K., European Union, or EU, Canada, Asia Pacific and the Middle East.

2. Summary of Significant Accounting Policies

Basis of Presentation

We prepared the accompanying unaudited consolidated financial statements in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2021. The accompanying unaudited consolidated financial statements reflect all adjustments that are, in our opinion, necessary for a fair presentation of results for the interim periods presented. We believe that these adjustments are of a normal recurring nature.

Preparing financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the amounts that are reported in our consolidated financial statements and accompanying disclosures. Actual amounts could differ from those estimates. The results of operations for the six months and three months ended June 30, 2022 are not necessarily indicative of the results to be expected for any future period or the full fiscal year.

These statements include the accounts of our wholly-owned and controlled subsidiaries. All intercompany balances and transactions between us and our wholly-owned and controlled subsidiaries have been eliminated in consolidation. For consolidated subsidiaries in which our ownership is less than 100% and for which we have control over the assets and liabilities and the management of the entity, the outside stockholders’ interests are shown as non-controlling interests.

We have considered the impacts of the ongoing conflict between Russia, Belarus and Ukraine on our financial statements. As of June 30, 2022, our businesses and operations, including our exchanges, clearing houses, listings venues, data services businesses and mortgage platforms, have not suffered a material negative impact as a result of these events. There continues to be uncertainty surrounding the extent and duration of this ongoing conflict and the impact that it may have on the global economy and on our business.

Consolidated Statements of Cash Flows Presentation

As of December 31, 2021, we revised our consolidated statements of cash flows to include changes in cash and cash equivalent margin within cash flows from financing activities and changes in invested margin deposits within cash flows from investing activities. This immaterial revision did not have an effect on our previously reported consolidated balance sheets, statements of income, statements of comprehensive income, or statements of changes in equity and redeemable non-controlling interest or the related disclosures. Cash and cash equivalent margin amounts cannot be used to satisfy the Company's operating or other liabilities, as further discussed in Note 12. The following table summarizes the

immaterial revisions to our historical consolidated statements of cash flows for the six months ended June 30, 2021 (in millions):


	Six Months Ended June 30, 2021
	As Previously Presented		Adjustment		As Adjusted
Purchases of invested margin deposits (within investing activities)	$	—	$	(1,644)	$	(1,644)
Proceeds from sales of invested margin deposits (within investing activities)	—		2,222		2,222
Net cash provided by investing activities	966		578		1,544
Change in cash and cash equivalent margin deposits and guaranty funds (within financing activities)	—		7,780		7,780
Net cash provided by/(used in) financing activities	(2,518)		7,780		5,262
Net increase in cash and cash equivalents, restricted cash and cash equivalents, and cash and cash equivalent margin deposits and guaranty funds	55		8,358		8,413
Cash and cash equivalents, restricted cash and cash equivalents, and cash and cash equivalent margin deposits and guaranty funds at beginning of period	1,991		81,628		83,619
Cash and cash equivalents, restricted cash and cash equivalents, and cash and cash equivalent margin deposits and guaranty funds at end of period	$	2,046	$	89,986	$	92,032

Recently Adopted Accounting Pronouncements

During the six months ended June 30, 2022, there were no significant changes to the new and recently adopted accounting pronouncements applicable to us from those disclosed in Note 2 to the consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021, or the 2021 Form 10-K.

3. Acquisitions and Divestitures

Pending Acquisition of Black Knight, Inc.

On May 4, 2022, we announced that we had entered into a definitive agreement to acquire Black Knight, Inc., or Black Knight, a software, data and analytics company that serves the housing finance continuum, including real estate data, mortgage lending and servicing, as well as the secondary markets. Pursuant to that certain Agreement and Plan of Merger, dated as of May 4, 2022, among ICE, Sand Merger Sub Corporation, a wholly owned subsidiary of ICE, or Sub, and Black Knight, which we refer to as the “merger agreement,” Sub will merge with and into Black Knight, which we refer to as the “merger,” with Black Knight surviving as a wholly owned subsidiary of ICE. As of May 4, 2022, the transaction was valued at approximately $13.1 billion, or $85 per share of Black Knight common stock, with cash comprising 80% of the value of the aggregate transaction consideration and shares of our common stock comprising 20% of the value of the aggregate transaction consideration at that time. The aggregate cash component of the transaction consideration is fixed at $10.5 billion, and the value of the aggregate stock component of the transaction consideration will fluctuate with the market price of our common stock and will be determined based on the average of the volume weighted averages of the trading prices of our common stock on each of the ten consecutive trading days ending three trading days prior to the closing of the merger. This transaction builds on our position as a provider of end-to-end electronic workflow solutions for the rapidly evolving U.S. residential mortgage industry.

Black Knight provides a comprehensive and integrated ecosystem of software, data and analytics solutions serving the real estate and housing finance markets. We believe the Black Knight ecosystem adds value for clients of all sizes across the mortgage and real estate lifecycles by helping organizations lower costs, increase efficiencies, grow their businesses, and reduce risk.

The transaction is expected to close in the first half of 2023, following the receipt of regulatory approvals and the satisfaction of customary closing conditions. On July 22, 2022, we filed an amended preliminary proxy statement/prospectus on Form S-4 with the SEC, which is undergoing review by the SEC.

Bakkt Transaction

As discussed in Note 3 to the consolidated financial statements included in Part II, Item 8 of our 2021 Form 10-K, on October 15, 2021, Bakkt Holdings, LLC, or Bakkt, completed its merger with VPC Impact Acquisition Holdings, or VIH, a

special purpose acquisition company sponsored by Victory Park Capital, or VPC. The newly combined company was renamed Bakkt Holdings, Inc. and is listed on the New York Stock Exchange, or NYSE.

Following the transaction, we held an approximate 68% economic interest in the combined company. As a result of limitations on ICE from the Bakkt voting agreement entered into in connection with the transaction, we hold a minority voting interest in the combined company. Prior to the closing, Bakkt revenues and operating expenses were reported within our consolidated revenues and operating expenses. Following the closing, as a consequence of holding a minority voting interest in the combined company, during the fourth quarter of 2021 we deconsolidated Bakkt and treat it as an equity method investment within our financial statements.

4. Investments

Equity Investments

Our equity investments are subject to valuation under ASU 2016-01, Financial Instruments- Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2016-01. See Note 14 for a discussion of our determination of fair value of our financial instruments.

Investment in Euroclear

We previously owned a 9.8% stake in Euroclear, plc, or Euroclear, that we originally purchased for $631 million. We participated on the Euroclear Board of Directors, and classified our investment in Euroclear as an equity investment.

On May 17, 2022, we announced the divestment of our 9.8% stake in Euroclear and we completed the sale during the three months ended June 30, 2022. The carrying value of our investment was $700 million at the time of the sale and was classified within other current assets on our balance sheet. We recorded a net gain on the sale of $41 million, which is included in other income, during the three months ended June 30, 2022.

We did not receive a dividend from Euroclear during the six months ended June 30, 2022. We recognized dividend income of $30 million during the six months ended June 30, 2021 from Euroclear, which is included in other income.

Investment in Coinbase

On December 1, 2014, we acquired preferred stock of Coinbase Global, Inc., or Coinbase, which operates a cryptocurrency exchange platform, for $10 million, representing a 1.4% ownership share on a fully-diluted, as-converted basis. On April 14, 2021, Coinbase completed an initial public offering, or IPO. On April 15, 2021, we completed the sale of our investment in Coinbase for $1.24 billion and recorded a gain of $1.23 billion, or $892 million net of tax, as other income in our consolidated statement of income during the three months ended June 30, 2021.

Equity Method Investments

Our equity method investments include the Options Clearing Corporation, or OCC, and Bakkt, among others. Our equity method investments are included in other non-current assets in the accompanying consolidated balance sheet. We carry our equity method investments at cost and assess the carrying value periodically if impairment indicators are present. At the end of each reporting period, we record our share of profits or losses of our equity method investments as equity earnings included in other income. We recognized ($57 million) and $34 million as our share of estimated (losses)/profits, net, from our equity method investments during the six months ended June 30, 2022 and 2021, respectively, and ($15 million) and $9 million as our share of (losses)/profits, net, from our equity method investments during the three months ended June 30, 2022 and 2021, respectively. The estimated losses during the six months and three months ended June 30, 2022 are primarily related to our investment in Bakkt, and the estimated profits during the six months and three months ended June 30, 2021 are related to our investment in OCC. Both periods include adjustments to reflect the difference between reported prior period actual results from our original estimates.

Investment in OCC

We own a 40% interest in OCC through a direct investment by the NYSE. OCC is regulated by the SEC as a registered clearing agency and by the Commodity Futures Trading Commission, or CFTC, as a derivatives clearing organization. OCC serves as a clearing house for securities options, security futures, commodity futures and options on futures traded on various independent exchanges. OCC clears securities options traded on NYSE Arca and NYSE Amex Options, along with other non-affiliated exchanges.

Investment in Bakkt

Following Bakkt's October 15, 2021 merger with VIH, we held an approximate 68% economic interest in Bakkt and treat it as an equity method investment (see Note 3). As of June 30, 2022 the carrying value of our Bakkt investment was $1.5 billion.

5. Revenue Recognition

Substantially all of our revenues are considered to be revenues from contracts with customers. The related accounts receivable balances are recorded in our balance sheets as customer accounts receivable. We do not have obligations for warranties, returns or refunds to customers, other than rebates, which are settled each period and therefore do not result in variable consideration. We do not have significant revenue recognized from performance obligations that were satisfied in prior periods, and we do not have any transaction price allocated to unsatisfied performance obligations other than in our deferred revenue.

Deferred revenue represents our contract liabilities related to our annual, original and other listings revenues, certain data services, clearing services, mortgage technology services and other revenues. Deferred revenue is our only significant contract liability. See Note 7 for our discussion of deferred revenue balances, activity, and expected timing of recognition.

For all of our contracts with customers, except for listings and certain data, clearing and mortgage services, our performance obligations are short term in nature and there is no significant variable consideration. In addition, we have elected the practical expedient of excluding sales taxes from transaction prices. We have assessed the costs incurred to obtain or fulfill a contract with a customer and determined them to be immaterial.

Certain judgments and estimates are used in the identification and timing of satisfaction of performance obligations and the related allocation of transaction price. We believe that these represent a faithful depiction of the transfer of services to our customers. Refer to Note 5 to the consolidated financial statements included in Part II, Item 8 of our 2021 Form 10-K where our primary revenue contract classifications are described in detail.

The following table depicts the disaggregation of our revenue according to business line and segment (in millions). Amounts here have been aggregated as they follow consistent revenue recognition patterns, and are consistent with the segment information in Note 15:


	Exchanges Segment		Fixed Income and Data Services Segment		Mortgage Technology Segment		Total Consolidated
Six Months Ended June 30, 2022:
Total revenues	$	3,247	$	1,021	$	604	$	4,872
Transaction-based expenses	1,159		—		—		1,159
Total revenues, less transaction-based expenses	$	2,088	$	1,021	$	604	$	3,713

Timing of Revenue Recognition
Services transferred at a point in time	$	1,197	$	159	$	270	$	1,626
Services transferred over time	891		862		334		2,087
Total revenues, less transaction-based expenses	$	2,088	$	1,021	$	604	$	3,713


	Exchanges Segment		Fixed Income and Data Services Segment		Mortgage Technology Segment		Total Consolidated
Six Months Ended June 30, 2021:
Total revenues	$	2,942	$	926	$	695	$	4,563
Transaction-based expenses	1,059		—		—		1,059
Total revenues, less transaction-based expenses	$	1,883	$	926	$	695	$	3,504

Timing of Revenue Recognition
Services transferred at a point in time	$	1,056	$	107	$	417	$	1,580
Services transferred over time	827		819		278		1,924
Total revenues, less transaction-based expenses	$	1,883	$	926	$	695	$	3,504


	Exchanges Segment		Fixed Income and Data Services Segment		Mortgage Technology Segment		Total Consolidated
Three Months Ended June 30, 2022
Total revenues	$	1,604	$	512	$	297	$	2,413
Transaction-based expenses	599		—		—		599
Total revenues, less transaction-based expenses	$	1,005	$	512	$	297	$	1,814

Timing of Revenue Recognition
Services transferred at a point in time	$	563	$	83	$	128	$	774
Services transferred over time	442		429		169		1,040
Total revenues, less transaction-based expenses	$	1,005	$	512	$	297	$	1,814


	Exchanges Segment		Fixed Income and Data Services Segment		Mortgage Technology Segment		Total Consolidated
Three Months Ended June 30, 2021
Total revenues	$	1,336	$	458	$	340	$	2,134
Transaction-based expenses	427		—		—		427
Total revenues, less transaction-based expenses	$	909	$	458	$	340	$	1,707

Timing of Revenue Recognition
Services transferred at a point in time	$	495	$	47	$	196	$	738
Services transferred over time	414		411		144		969
Total revenues, less transaction-based expenses	$	909	$	458	$	340	$	1,707

The Exchanges segment and the Fixed Income and Data Services segment revenues above include data services revenues. Our data services revenues are transferred over time, and a majority of those revenues are performed over a short period of time of one month or less and relate to subscription-based data services billed monthly, quarterly or annually in advance. These revenues are recognized ratably over time as our data delivery performance obligations are met consistently throughout the period.

The Exchanges segment revenues transferred over time in the table above also include services related to listings, services related to risk management of open interest performance obligations and services related to regulatory fees, trading permits, and software licenses.

The Fixed Income and Data Services segment revenues transferred over time in the table above also include services related to risk management of open interest performance obligations, primarily in our CDS business.

The Mortgage Technology segment revenues transferred over time in the table above primarily relate to our origination technology revenue where performance obligations consist of a series of distinct services and are recognized over the contract terms as subscription performance obligations are satisfied, and to a lesser extent, professional services revenues and revenues from certain of our data and analytics offerings.

The components of services transferred over time for each of our segments are as follows:


	Six Months Ended June 30,				Three Months Ended June 30,
	2022		2021		2022		2021
Exchanges Segment:
Data services revenues	$	432	$	415	$	218	$	208
Services transferred over time related to risk management of open interest performance obligations	$	139	$	125	$	63	$	59
Services transferred over time related to listings	$	260	$	233	$	131	$	119
Services transferred over time related to regulatory fees, trading permits, and software licenses	$	60	$	54	$	30	$	28
Total	$	891	$	827	$	442	$	414

Fixed Income Data Services Segment:
Data services revenues	$	843	$	806	$	421	$	407
Services transferred over time related to risk management of open interest performance obligations in our CDS business	$	19	$	13	$	8	$	4
Total	$	862	$	819	$	429	$	411

Mortgage Technology Segment:
Subscription revenues	$	312	$	258	$	159	$	134
Professional service revenues and other	$	22	$	20	$	10	$	10
Total	$	334	$	278	$	169	$	144

Total consolidated revenues transferred over time	$	2,087	$	1,924	$	1,040	$	969

6. Goodwill and Other Intangible Assets

The following is a summary of the activity in the goodwill balance for the six months ended June 30, 2022 (in millions):


Goodwill balance at December 31, 2021	$	21,123
Acquisitions	31
Foreign currency translation	(46)
Other activity, net	(2)
Goodwill balance at June 30, 2022	$	21,106

The following is a summary of the activity in the other intangible assets balance for the six months ended June 30, 2022 (in millions):


Other intangible assets balance at December 31, 2021	$	13,736
Acquisitions	7

Foreign currency translation	(43)

Amortization of other intangible assets	(306)
Other activity, net	3
Other intangible assets balance at June 30, 2022	$	13,397

Foreign currency translation adjustments result from a portion of our goodwill and other intangible assets being held at our U.K., EU and Canadian subsidiaries, whose functional currencies are not the U.S. dollar. The changes in other activity, net, in the table above primarily relate to adjustments to the fair value of the net tangible and intangible assets made within one year of acquisitions, with a corresponding adjustment to goodwill. We have performed an analysis of impairment indicators and did not recognize any impairment losses on goodwill or other intangible assets during the six months or three months ended June 30, 2022.

7. Deferred Revenue

Our contract liabilities, or deferred revenue, represent consideration received that is yet to be recognized as revenue. Total deferred revenue was $575 million as of June 30, 2022, including $473 million in current deferred revenue and $102

million in other non-current liabilities. The changes in our deferred revenue during the six months ended June 30, 2022 are as follows (in millions):


	Annual Listings Revenues		Original Listings Revenues		Other Listings Revenues		Data Services and Other Revenues		Mortgage Technology		Total
Deferred revenue balance at December 31, 2021	$	—	$	19	$	93	$	93	$	79	$	284
Additions	435		31		34		283		46		829
Amortization	(219)		(19)		(23)		(222)		(55)		(538)
Deferred revenue balance at June 30, 2022	$	216	$	31	$	104	$	154	$	70	$	575

The changes in our deferred revenue during the six months ended June 30, 2021 are as follows (in millions):


	Annual Listings Revenues		Original Listings Revenues		Other Listings Revenues		Data Services and Other Revenues		Mortgage Technology		Total
Deferred revenue balance at December 31, 2020	$	—	$	13	$	92	$	95	$	59	$	259
Additions	384		19		34		265		37		739
Amortization	(197)		(14)		(22)		(206)		(21)		(460)
Deferred revenue balance at June 30, 2021	$	187	$	18	$	104	$	154	$	75	$	538

Included in the amortization recognized during the six months ended June 30, 2022 is $119 million related to the deferred revenue balance as of December 31, 2021. Included in the amortization recognized for the six months ended June 30, 2021 is $98 million related to the deferred revenue balance as of December 31, 2020. As of June 30, 2022, the remaining deferred revenue balance will be recognized over the period of time we satisfy our performance obligations as described in Note 5.

8. Debt

Our total debt, including short-term and long-term debt, consisted of the following (in millions):


	As of June 30, 2022		As of December 31, 2021
Debt:
Short-term debt:
Commercial Paper	$	—	$	1,012

2022 Senior Notes (2.35% senior unsecured notes due September 15, 2022)	—		499
Other short-term debt	4		10
Total short-term debt	4		1,521
Long-term debt:

2023 Senior Notes (0.70% senior unsecured notes due June 15, 2023)	—		997
2023 Senior Notes (3.45% senior unsecured notes due September 21, 2023)	—		399
2023 Senior Notes (4.00% senior unsecured notes due October 15, 2023)	—		797
2025 Senior Notes (3.65% senior unsecured notes due May 23, 2025)	1,242		—
2025 Senior Notes (3.75% senior unsecured notes due December 1, 2025)	1,247		1,246
2027 Senior Notes (4.00% senior unsecured notes due September 15, 2027)	1,485		—
2027 Senior Notes (3.10% senior unsecured notes due September 15, 2027)	497		497
2028 Senior Notes (3.75% senior unsecured notes due September 21, 2028)	594		594
2029 Senior Notes (4.35% senior unsecured notes due June 15, 2029)	1,239		—
2030 Senior Notes (2.10% senior unsecured notes due June 15, 2030)	1,235		1,234
2032 Senior Notes (1.85% senior unsecured notes due September 15, 2032)	1,484		1,483
2033 Senior Notes (4.60% senior unsecured notes due March 15, 2033)	1,487		—
2040 Senior Notes (2.65% senior unsecured notes due September 15, 2040)	1,230		1,230
2048 Senior Notes (4.25% senior unsecured notes due September 21, 2048)	1,231		1,230
2050 Senior Notes (3.00% senior unsecured notes due June 15, 2050)	1,221		1,220
2052 Senior Notes (4.95% senior unsecured notes due June 15, 2052)	1,463		—
2060 Senior Notes (3.00% senior unsecured notes due September 15, 2060)	1,471		1,470
2062 Senior Notes (5.20% senior unsecured notes due June 15, 2062)	983		—
Total long-term debt	18,109		12,397
Total debt	$	18,113	$	13,918

Our senior notes of $18.1 billion have a weighted average maturity of 17 years and a weighted average cost of 3.6% per annum.

Credit Facilities

We have a $3.9 billion senior unsecured revolving credit facility, or the Credit Facility, with future capacity to increase our borrowings under the Credit Facility by an additional $1.0 billion, subject to the consent of the lenders funding the increase and certain other conditions. On May 25, 2022, we agreed with the lenders to extend the maturity date of the Credit Facility from October 15, 2026, to May 25, 2027, among other items. We also exercised our option to increase the amount of the Credit Facility from $3.8 billion to $3.9 billion. We incurred new debt issuance costs of $4 million relating to the Credit Facility and these costs are represented in the accompanying consolidated balance sheet as other non-current assets and will be amortized over the remaining life of the Credit Facility. No amounts were outstanding under the Credit Facility as of June 30, 2022.

As of June 30, 2022, of the $3.9 billion that is currently available for borrowing under the Credit Facility, $170 million is required to support certain broker-dealer and other subsidiary commitments. As of June 30, 2022, and as there is no commercial paper outstanding, there is no required amount to backstop our U.S. dollar commercial paper program, or the Commercial Paper Program. The amount required to backstop the amounts outstanding under the Commercial Paper Program will fluctuate as we increase or decrease our commercial paper borrowings. The remaining $3.7 billion is available for working capital and general corporate purposes including, but not limited to, acting as a backstop to future increases in the amounts outstanding under the Commercial Paper Program.

On May 4, 2022, we entered into a 364-day senior unsecured bridge facility in an aggregate principal amount not to exceed $14.0 billion, or the Bridge Facility. The commitments that the Company obtained for the Bridge Facility have been permanently reduced from $14.0 billion to $1.2 billion as of June 30, 2022 as a result of (i) the amendment and extension of the Credit Facility, (ii) the issuance by the Company of certain senior unsecured notes on May 23, 2022, (iii) Euroclear divestment proceeds, (iv) the generation of cash internally by the Company, and (v) the effectiveness of our term loan facility.

On May 25, 2022, we entered into a $2.4 billion two-year senior unsecured delayed draw term loan facility, or Term Loan. Draws under the Term Loan bear interest on the principal amount outstanding at either (a) Term Secured Overnight Financing Rate, or Term SOFR, plus an applicable margin plus a credit spread adjustment of 10 basis points or (b) a "base rate" plus an applicable margin. The applicable margin ranges from 0.625% to 1.125% for Term SOFR loans and from 0.000% to 0.125% for base rate loans, in each case, based on a ratings-based pricing grid. The proceeds from borrowings under the Term Loan will be used to fund a portion of the purchase price for the Black Knight acquisition. We incurred new debt issuance costs of $4 million relating to the Term Loan and these costs are represented in the accompanying consolidated balance sheet as other non-current assets and will be amortized over the remaining life of the Term Loan. We have the option to prepay outstanding amounts under the Term Loan in whole or in part at any time. No amounts were outstanding under the Term Loan as of June 30, 2022.

Our India subsidiaries maintain $14 million of credit lines for their general corporate purposes. As of June 30, 2022, they had borrowed $4 million, which is reflected as “other short-term debt” in the table above.

Commercial Paper Program

Our Commercial Paper Program is currently backed by the borrowing capacity available under the Credit Facility, as described above. The effective interest rate of commercial paper issuances does not materially differ from short-term interest rates, which fluctuate due to market conditions and as a result may impact our interest expense. During the six months ended June 30, 2022, we had net paydowns of $1.0 billion under the Commercial Paper Program and did not have any notes outstanding under our Commercial Paper Program as of June 30, 2022.

New Senior Notes

On May 23, 2022, we issued $8.0 billion in aggregate principal amount of new senior notes, comprised of the following:

$1.25 billion in aggregate principal amount of 3.65% senior notes due in 2025, or the 2025 Notes;
$1.5 billion in aggregate principal amount of 4.00% senior notes due in 2027, or the 2027 Notes;
$1.25 billion in aggregate principal amount of 4.35% senior notes due in 2029, or the 2029 Notes;
$1.5 billion in aggregate principal amount of 4.60% senior notes due in 2033, or the 2033 Notes;
$1.5 billion in aggregate principal amount of 4.95% senior notes due in 2052, or the 2052 Notes; and
$1.0 billion in aggregate principal amount of 5.20% senior notes due in 2062, or the 2062 Notes, and collectively, the Notes.

We intend to use the net proceeds of $4.9 billion from the offering of the 2025 Notes, the 2027 Notes, the 2029 Notes and the 2062 Notes, or collectively, the SMR Notes, together with the issuance of commercial paper and/or borrowings under the Credit Facility, cash on hand or other immediately available funds and borrowings under the Term Loan, to finance the cash portion of the purchase price for Black Knight. The SMR Notes are subject to a special mandatory redemption feature pursuant to which we will be required to redeem all of the outstanding SMR Notes at a redemption price equal to 101% of the aggregate principal amount of the SMR Notes, plus accrued and unpaid interest, in the event that the Black Knight acquisition is not consummated on or prior to May 4, 2023, subject to two automatic extensions of three months each, to August 4, 2023 and to November 4, 2023, respectively, if U.S. antitrust clearance or a related law, injunction, order or other judgment, in each case whether temporary, preliminary or permanent, that restrains, enjoins or otherwise prohibits the consummation of the Black Knight merger remains outstanding and all other conditions to closing are satisfied (or in the case of conditions that by their terms are to be satisfied at the closing, are capable of being satisfied if the closing were to occur on such date) at each extension date, or if the Black Knight merger agreement is terminated at any time prior to such date. The $4.9 billion net proceeds from the SMR Notes are separately invested and recorded as short-term restricted cash and cash equivalents in our consolidated balance sheet as of June 30, 2022.

We used the $3.0 billion of net proceeds from the offering of the 2033 Notes and the 2052 Notes to redeem $2.7 billion aggregate principal amount of four series of senior notes that would have matured in 2022 and 2023. The balance of the net proceeds was used for general corporate purposes, which included paying down a portion of the amounts outstanding under our Commercial Paper Program. We recorded $30 million in costs associated with the extinguishment and re-financing of our existing debt in connection with our May 2022 debt refinancing. These costs are included in interest

expense in our consolidated statements of income for the six months ended June 30, 2022.

We incurred debt issuance costs of $67 million relating to the issuance of the Notes and these costs are presented in the accompanying consolidated balance sheet as a deduction from the carrying amount of the related debt liability and will be amortized over the remaining term of each series of the Notes. The Notes contain affirmative and negative covenants, including, but not limited to, certain redemption rights, limitations on liens and indebtedness and limitations on certain mergers, sales, dispositions and lease-back transactions.

9. Share-Based Compensation

We currently sponsor employee and director stock option, restricted stock and employee stock purchase plans. Stock options and restricted stock are granted at the discretion of the Compensation Committee of our Board of Directors, or Board, based on the estimated fair value on the date of grant. The fair value of the stock options and restricted stock on the date of grant is recognized as expense over the vesting period, net of forfeitures. The non-cash compensation expenses recognized in our consolidated statements of income for stock options, restricted stock and under our employee stock purchase plan, net of amounts classified as capitalized software, were $76 million and $73 million for the six months ended June 30, 2022 and 2021, respectively, and $38 million and $37 million during the three months ended June 30, 2022 and 2021, respectively.

Stock Option Plans

We use the Black-Scholes option pricing model to value our stock option awards. During the six months ended June 30, 2022 and 2021, we used the assumptions in the table below to compute the value:


	Six Months Ended June 30,
Assumptions:	2022	2021
Risk-free interest rate	1.72%	0.64%
Expected life in years	6.0	5.7
Expected volatility	23%	24%
Expected dividend yield	1.17%	1.16%
Estimated weighted-average fair value of options granted per share	$28.18	$22.70

The risk-free interest rate is based on the zero-coupon U.S. Treasury yield curve in effect at the date of grant. The expected life is derived from historical and anticipated future exercise patterns. Expected volatility is based on historical volatility data of our stock.

Restricted Stock Plans

Restricted shares are used as an incentive to attract and retain qualified employees and to align our and our stockholders' interests by linking actual performance to both short and long-term stockholder return. We issue awards that may contain a combination of time, performance and/or market conditions. The grant date fair value of each award is based on the closing stock price of our stock at the date of grant. For time-based restricted stock, we recognize expense ratably over the vesting period, which is typically three or four years, net of forfeitures.

In February 2022, we reserved a maximum of 0.7 million restricted shares for potential issuance as performance-based restricted shares to certain of our employees. The number of shares ultimately granted under this award will be based on our actual financial performance as compared to financial performance targets set by our Board and the Compensation Committee for the year ending December 31, 2022, and will also be subject to a market condition reduction based on how our 2022 total stockholder return, or TSR, compares to that of the S&P 500 Index. The maximum compensation expense to be recognized under these performance-based restricted shares is $84 million if the maximum financial performance target is met and all 0.7 million shares vest. The compensation expense to be recognized under these performance-based restricted shares will be $42 million if the target financial performance is met, which would result in 0.3 million shares vesting. For these awards with performance conditions, we recognize expense on an accelerated basis over the three-year vesting period based on our quarterly assessment of the probable 2022 actual financial performance as compared to the 2022 financial performance targets. As of June 30, 2022, our best estimate is that the financial performance level will be at target for 2022. Based on this assessment, we recorded non-cash compensation expense of $10 million and $6 million for the six months and three months ended June 30, 2022, respectively, related to these awards and the remaining $32 million in non-cash compensation expense will be recorded on an accelerated basis over the remaining vesting period, including $13 million which will be recorded over the remainder of 2022.

We also issue awards with a market condition but no performance condition. The fair value of these awards is estimated based on a simulation of various outcomes and includes inputs such as our stock price on the grant date, the valuation of historical awards with market conditions, the relatively low likelihood that the market condition will affect the number of shares granted (as the market condition only affects shares granted in excess of certain financial performance targets), and our expectation of achieving the financial performance targets.

10. Equity

Stock Repurchase Program

In December 2021, our Board approved an aggregate of $3.15 billion for future repurchases of our common stock with no fixed expiration date that became effective on January 1, 2022. The $3.15 billion replaced the previous amount approved by the Board. The approval of our Board for the share repurchases does not obligate us to acquire any particular amount of our common stock. In addition, our Board may increase or decrease the amount available for repurchases from time to time. We fund repurchases from our operating cash flow or borrowings under our debt facilities or our Commercial Paper Program. Repurchases may be made from time to time on the open market, through established trading plans, in privately-negotiated transactions or otherwise, in accordance with all applicable securities laws, rules and regulations. We may begin or discontinue stock repurchases at any time and may amend or terminate a Rule 10b5-1 trading plan at any time or enter into additional plans.

During the six months and three months ended June 30, 2022, we repurchased a total of 5.0 million and 1.3 million shares, respectively, of our outstanding common stock at a cost of $632 million and $157 million, respectively, consisting of 4.6 million shares at a cost of $582 million under our Rule 10b5-1 trading plan and 0.4 million shares at a cost of $50 million on the open market during an open trading period. All shares repurchased during the three months ended June 30, 2022 were done under our Rule 10b5-1 trading plan. We had no stock repurchases during the six months ended June 30, 2021. As of June 30, 2022, the remaining balance of Board approved funds for future repurchases was $2.5 billion. In connection with our pending acquisition of Black Knight, on May 4, 2022 we terminated our Rule 10b5-1 trading plan and suspended share repurchases.

Dividends

During the six months ended June 30, 2022 and 2021, we declared and paid cash dividends per share of $0.76 and $0.66, respectively, for an aggregate payout of $427 million and $374 million, respectively. During the three months ended June 30, 2022 and 2021, we declared and paid cash dividends per share of $0.38 and $0.33, respectively, for an aggregate payout of $213 million and $187 million, respectively. The declaration of dividends is subject to the discretion of our Board. Our Board has adopted a quarterly dividend declaration policy providing that the declaration of any dividends will be determined quarterly by the Board or the Audit Committee, taking into account such factors as our evolving business model, prevailing business conditions, our financial results and capital requirements and other considerations which our Board deems relevant, without a predetermined annual net income payout ratio.

Accumulated Other Comprehensive Income/(Loss)

The following tables present changes in the accumulated balances for each component of other comprehensive income/ (loss) (in millions):


	Changes in Accumulated Other Comprehensive Income/(Loss) by Component
	Foreign currency translation adjustments		Comprehensive income from equity method investment		Employee benefit plans adjustments		Total















Balance, as of December 31, 2021	$	(150)	$	2	$	(48)	$	(196)
Other comprehensive income/(loss)	(110)		—		—		(110)
Income tax benefit/(expense)	1		—		—		1
Net current period other comprehensive income/(loss)	(109)		—		—		(109)
Balance, as of June 30, 2022	$	(259)	$	2	$	(48)	$	(305)


	Changes in Accumulated Other Comprehensive Income/(Loss) by Component
	Foreign currency translation adjustments		Comprehensive income from equity method investment		Employee benefit plans adjustments		Total















Balance, as of March 31, 2022	$	(175)	$	2	$	(48)	$	(221)
Other comprehensive income/(loss)	(85)		—		—		(85)
Income tax benefit/(expense)	1		—		—		1
Net current period other comprehensive income/(loss)	(84)		—		—		(84)
Balance, as of June 30, 2022	$	(259)	$	2	$	(48)	$	(305)


	Changes in Accumulated Other Comprehensive Income/(Loss) by Component
	Foreign currency translation adjustments		Comprehensive income from equity method investment		Employee benefit plans adjustments		Total















Balance, as of December 31, 2020	$	(134)	$	1	$	(59)	$	(192)
Other comprehensive income/(loss)	17		2		—		19
Income tax benefit/(expense)	—		(1)		—		(1)
Net current period other comprehensive income/(loss)	17		1		—		18
Balance, as of June 30, 2021	$	(117)	$	2	$	(59)	$	(174)


	Changes in Accumulated Other Comprehensive Income/(Loss) by Component
	Foreign currency translation adjustments		Comprehensive income from equity method investment		Employee benefit plans adjustments		Total















Balance, as of March 31, 2021	$	(127)	$	2	$	(59)	$	(184)
Other comprehensive income/(loss)	11		—		—		11
Income tax benefit/(expense)	(1)		—		—		(1)
Net current period other comprehensive income/(loss)	10		—		—		10
Balance, as of June 30, 2021	$	(117)	$	2	$	(59)	$	(174)

11. Income Taxes

Our effective tax rate was 22% and 31% for the six months ended June 30, 2022 and 2021, respectively, and 23% and 35% during the three months ended June 30, 2022 and 2021, respectively. The effective tax rates for the six months and three months ended June 30, 2022 were lower than the effective tax rates for the comparable periods in 2021 primarily due to the deferred income tax impact from U.K. tax law changes as well as from the impact of the sale of our investment in Coinbase during the six months ended June 30, 2021. During the three months ended June 30, 2021, the U.K. Finance Act 2021 was enacted, which increased the U.K. corporate income tax rate from 19% to 25%, effective April 1, 2023. The combined impact of the U.K. deferred tax provision and the sale of our investment in Coinbase for the six months and three months ended June 30, 2021 increased our effective tax rate by 8 and 12 percentage points, respectively.

12. Clearing Operations

We operate six clearing houses, each of which acts as a central counterparty that becomes the buyer to every seller and the seller to every buyer for its clearing members or participants, or Members. Through this central counterparty function, the clearing houses provide financial security for each transaction for the duration of the position by limiting counterparty credit risk.

Our clearing houses are responsible for providing clearing services to each of our futures exchanges, and in some cases to third-party execution venues, and are as follows, referred to herein collectively as "the ICE Clearing Houses":


Clearing House	Products Cleared	Exchange where Executed	Location
ICE Clear Europe	Energy, agricultural, interest rates and equity index futures and options contracts and OTC European CDS instruments	ICE Futures Europe, ICE Futures U.S., ICE Endex, ICE Futures Abu Dhabi and third-party venues	U.K.
ICE Clear U.S.	Agricultural, metals, foreign exchange, or FX, interest rate, equity index and digital asset futures and/or options contracts	ICE Futures U.S.	U.S.
ICE Clear Credit	OTC North American, European, Asian-Pacific and Emerging Market CDS instruments	Creditex and third-party venues	U.S.
ICE Clear Netherlands	Derivatives on equities and equity indices traded on regulated markets	ICE Endex	The Netherlands
ICE Clear Singapore	Energy, metals and financial futures products and digital assets futures contracts	ICE Futures Singapore	Singapore
ICE NGX	Physical North American natural gas and electricity	ICE NGX	Canada

In June 2022, we announced our decision to cease our CDS clearing service at ICE Clear Europe, our clearing house in the U.K., and our CDS clearing offering will therefore be consolidated at our ICE Clear Credit clearing house in the U.S.

Original and Variation Margin

Each of the ICE Clearing Houses generally requires all Members to deposit collateral in cash or certain pledged assets. The collateral deposits are known as “original margin.” In addition, the ICE Clearing Houses may make intraday original margin calls in circumstances where market conditions require additional protection. The daily profits and losses to and from the ICE Clearing Houses due to the marking-to-market of open contracts is known as “variation margin.” With the exception of ICE NGX’s physical natural gas and physical power products discussed separately below, the ICE Clearing Houses mark all outstanding contracts to market, and therefore pay and collect variation margin, at least once daily.

The amounts that Members are required to maintain are determined by proprietary risk models established by each ICE Clearing House and reviewed by the relevant regulators, independent model validators, risk committees and the boards of directors of the respective ICE Clearing House. The amounts required may fluctuate over time. Each of the ICE Clearing Houses is a separate legal entity and is not subject to the liabilities of the others, or the obligations of Members of the other ICE Clearing Houses.

Should a particular Member fail to deposit its original margin or fail to make a variation margin payment, when and as required, the relevant ICE Clearing House may liquidate or hedge the defaulting Member's open positions and use their original margin and guaranty fund deposits to pay any amount owed. In the event that the defaulting Member's deposits are not sufficient to pay the amount owed in full, the ICE Clearing Houses will first use their respective contributions to the guaranty fund, often referred to as Skin In The Game, or SITG, to pay any remaining amount owed. In the event that the SITG is not sufficient, the ICE Clearing Houses may utilize the respective guaranty fund deposits and default insurance, or collect limited additional funds from their respective non-defaulting Members on a pro-rata basis, to pay any remaining amount owed.

As of June 30, 2022 and December 31, 2021, the ICE Clearing Houses had received or had been pledged $270.8 billion and $239.9 billion, respectively, in cash and non-cash collateral in original margin and guaranty fund deposits to cover price movements of underlying contracts for both periods.

Guaranty Funds and ICE Contribution

As described above, mechanisms have been created, called guaranty funds, to provide partial protection in the event of a Member default. With the exception of ICE NGX, each of the ICE Clearing Houses requires that each Member make deposits into a guaranty fund.

In addition, we have contributed our own capital that could be used if a defaulting Member’s original margin and guaranty fund deposits are insufficient. Such amounts are recorded as long-term restricted cash and cash equivalents in our balance sheets and are as follows (in millions):


	ICE Portion of Guaranty Fund Contribution		Default insurance
Clearing House	As of June 30, 2022	As of December 31, 2021	As of June 30, 2022	As of December 31, 2021
ICE Clear Europe	$247	$247	$75	$75
ICE Clear U.S.	90	83	25	25
ICE Clear Credit	50	50	50	50
ICE Clear Netherlands	2	2	N/A	N/A
ICE Clear Singapore	1	1	N/A	N/A
ICE NGX	15	15	200	100
Total	$405	$398	$350	$250

Of our total contribution to ICE Clear U.S. above, as of June 30, 2022, $15 million was solely applicable to any losses associated with a default in Bitcoin contracts and other digital assets that ICE Clear U.S. may clear in the future.

We also maintain default insurance as an additional layer of clearing member default protection. The default insurance was added in September 2019 and has a three-year term for the following clearing houses in the following amounts: ICE Clear Europe - $75 million; ICE Clear U.S. - $25 million and ICE Clear Credit - $50 million. The default insurance layer resides after and in addition to the ICE Clear Europe, ICE Clear U.S. and ICE Clear Credit SITG contributions and before the guaranty fund contributions of the non-defaulting Members. Renewal is currently being pursued and is subject to availability, cost and risk coverage considerations.

Similar to SITG, the default insurance layer is not intended to replace or reduce the position risk-based amount of the guaranty fund. As a result, the default insurance layer is not a factor that is included in the calculation of the Members' guaranty fund contribution requirement. Instead, it serves as an additional, distinct, and separate default resource that should serve to further protect the non-defaulting Members’ guaranty fund contributions from being mutualized in the event of a default.

As of June 30, 2022, ICE NGX maintained a guaranty fund of $215 million, comprising $15 million in cash and a $200 million letter of credit backed by a default insurance policy of the same amount, discussed below.

Below you will find our Default Waterfall which summarizes the lines of defense and layers of protection we maintain at the ICE Clearing Houses.

ICE Clearing House Default Waterfall

Cash and Invested Deposits

We have recorded cash and invested margin and guaranty fund deposits and amounts due in our balance sheets as current assets with corresponding current liabilities to the Members. As of June 30, 2022, our cash and invested margin and guaranty fund deposits were as follows (in millions):


	ICE Clear Europe (1)		ICE Clear Credit		ICE Clear U.S.		ICE NGX		Other ICE Clearing Houses		Total
Original margin	$	98,940	$	52,031	$	4,788	$	—	$	4	$	155,763
Unsettled variation margin, net	—		—		—		841		—		841
Guaranty fund	3,940		4,942		614		—		4		9,500
Delivery contracts receivable/payable, net	—		—		—		1,568		—		1,568
Total	$	102,880	$	56,973	$	5,402	$	2,409	$	8	$	167,672

As of December 31, 2021, our cash and invested margin and guaranty fund deposits were as follows (in millions):


	ICE Clear Europe (2)		ICE Clear Credit		ICE Clear U.S.		ICE NGX		Other ICE Clearing Houses		Total
Original margin	$	94,010	$	39,372	$	6,963	$	—	$	27	$	140,372
Unsettled variation margin, net	—		—		—		226		—		226
Guaranty fund	4,175		3,952		597		—		4		8,728
Delivery contracts receivable/payable, net	—		—		—		1,103		—		1,103
Total	$	98,185	$	43,324	$	7,560	$	1,329	$	31	$	150,429

(1) $95.0 billion and $7.9 billion is related to futures/options and CDS, respectively.

(2) $92.0 billion and $6.2 billion is related to futures/options and CDS, respectively.

Our cash and invested margin and guaranty fund deposits are maintained in accounts with national banks and highly-rated financial institutions or secured through direct investments, primarily in U.S. Treasury and other highly-rated foreign government securities, or reverse repurchase agreements with primarily overnight maturities. We primarily use Level 1 inputs when evaluating the fair value of the non-cash equivalent direct investments, as highly-rated government securities are quoted in active markets. The carrying value of these deposits is deemed to approximate fair value.

To provide a tool to address the liquidity needs of our clearing houses and manage the liquidation of margin and guaranty fund deposits held in the form of cash and high quality sovereign debt, ICE Clear Europe, ICE Clear Credit and ICE Clear U.S. have entered into Committed Repurchase Agreement Facilities, or Committed Repo. Additionally, ICE Clear Credit and ICE Clear Netherlands have entered into Committed FX Facilities to support these liquidity needs. As of June 30, 2022, the following facilities were in place:

ICE Clear Europe: $1.0 billion in Committed Repo to finance U.S. dollar, euro and pound sterling deposits.
ICE Clear Credit: $300 million in Committed Repo (U.S. dollar based) to finance U.S. dollar denominated sovereign debt and euro deposits, €250 million in Committed Repo (euro based) to finance euro and U.S. dollar denominated sovereign debt deposits, and €1.9 billion in Committed FX Facilities to finance euro payment obligations.
ICE Clear U.S.: $250 million in Committed Repo to finance U.S. dollar denominated sovereign debt deposits.
ICE Clear Netherlands: €10 million in Committed FX Facilities to finance euro payment obligations.

Details of our deposits are as follows (in millions):


Cash and Cash Equivalent Margin Deposits and Guaranty Funds
Clearing House	Investment Type	As of June 30, 2022		As of December 31, 2021
ICE Clear Europe	National bank account (1)	$	37,983	$	59,948
ICE Clear Europe	Reverse repo	45,717		25,518
ICE Clear Europe	Sovereign debt	16,450		9,324
ICE Clear Europe	Demand deposits	1,949		231
ICE Clear Credit	National bank account	48,446		37,282
ICE Clear Credit	Reverse repo	4,606		3,639
ICE Clear Credit	Demand deposits	3,921		2,403
ICE Clear U.S.	Reverse repo	4,929		6,485
ICE Clear U.S.	Sovereign Debt	474		1,075
Other ICE Clearing Houses	Demand deposits	8		31

Total cash and cash equivalent margin deposits and guaranty funds		$	164,483	$	145,936


Clearing House	Investment Type	As of June 30, 2022		As of December 31, 2021
ICE NGX	Unsettled variation margin and delivery contracts receivable/payable	2,409		1,329
ICE Clear Europe	Invested deposits - sovereign debt	780		3,164
Total invested deposits, delivery contracts receivable and unsettled variation margin		$	3,189	$	4,493

(1) As of June 30, 2022, ICE Clear Europe held €32.7 billion ($34.3 billion based on the euro/U.S. dollar exchange rate of 1.0483 as of June 30, 2022) at the European Central Bank, or ECB, £3.0 billion ($3.7 billion based on the pound sterling/U.S. dollar exchange rate of 1.2178 as of June 30, 2022) at the Bank of England, or BOE, and €10 million ($10 million based on the above exchange rate) at the BOE. As of December 31, 2021, ICE Clear Europe held €47.2 billion ($53.7 billion based on the euro/U.S. dollar exchange rate of 1.1372 as of December 31, 2021) at ECB, £1.7 billion ($2.3 billion based on the pound sterling/U.S. dollar exchange rate of 1.3524 as of December 31, 2021), as well as $4.0 billion at the BOE, and €10 million ($11 million based on the above exchange rate) at the BOE.

Other Deposits

Non-cash original margin and guaranty fund deposits are not reflected in the accompanying consolidated balance sheets as the risks and rewards of these assets remain with the clearing members unless the clearing houses have sold or re-pledged the assets or in the event of a clearing member default, where the clearing member is no longer entitled to redeem the assets. Any income, gain or loss accrues to the clearing members.

In addition to the cash and invested deposits above, the ICE Clearing Houses have also received other assets from Members, which include government obligations, and may include other non-cash collateral such as letters of credit at ICE NGX, or gold on rare occasions at ICE Clear Europe, to mitigate credit risk. For certain deposits, we may impose discount or “haircut” rates to ensure adequate collateral if market values fluctuate. The value-related risks and rewards of these assets remain with the Members. Any gain or loss accrues to the Member. The ICE Clearing Houses do not, in the ordinary course, rehypothecate or re-pledge these assets. These pledged assets are not reflected in our balance sheets, and are as follows (in millions):


	As of June 30, 2022
	ICE Clear Europe		ICE Clear Credit		ICE Clear U.S.		ICE NGX		Total
Original margin:
Government securities at face value	$	71,965	$	8,904	$	15,141	$	—	$	96,010
Letters of credit	—		—		—		4,420		4,420
ICE NGX cash deposits	—		—		—		1,595		1,595
Total	$	71,965	$	8,904	$	15,141	$	6,015	$	102,025
Guaranty fund:
Government securities at face value	$	612	$	248	$	260	$	—	$	1,120


	As of December 31, 2021
	ICE Clear Europe		ICE Clear Credit		ICE Clear U.S.		ICE NGX		Total
Original margin:
Government securities at face value	$	58,156	$	8,425	$	17,211	$	—	$	83,792
Letters of credit	—		—		—		3,566		3,566
ICE NGX cash deposits	—		—		—		987		987
Total	$	58,156	$	8,425	$	17,211	$	4,553	$	88,345
Guaranty fund:
Government securities at face value	$	740	$	152	$	273	$	—	$	1,165

ICE NGX

ICE NGX owns a clearing house which primarily administers the physical delivery of energy trading contracts. ICE NGX is the central counterparty to Members on opposite sides of its physically-settled contracts, and the balance related to delivered but unpaid contracts is recorded as a delivery contract net receivable, with an offsetting delivery contract net payable in our balance sheets. Unsettled variation margin equal to the fair value of open contracts is recorded as of each balance sheet date. There is no impact on our consolidated statements of income as an equal amount is recognized as both an asset and a liability. ICE NGX marks all its outstanding physical natural gas and physical power contracts to market daily, but only collects variation margin when a Member's open position falls outside a specified percentage of its pledged collateral. Due to the highly liquid nature and the short period of time to maturity, the fair values of our delivery contract net payable and net receivable are determined to approximate carrying value.

ICE NGX requires Members to maintain cash or letters of credit to serve as collateral in the event of default. The cash is maintained in a segregated bank account for the benefit of the Member, and remains the property of the Member, therefore, it is not included in our balance sheets. ICE NGX maintains a committed daylight-overnight liquidity facility in the amount of $100 million with an additional $150 million uncommitted with a third-party Canadian chartered bank which provides liquidity in the event of a settlement shortfall, subject to certain conditions.

During the six months ended June 30, 2022, NGX increased its default insurance by $100 million, and as of June 30, 2022, ICE NGX maintains a guaranty fund of $215 million funded by a $200 million letter of credit issued by a major Canadian chartered bank, and backed by default insurance underwritten by Export Development Canada, or EDC, a Crown corporation operated at arm’s length from the Canadian government, plus $15 million held as restricted cash to fund the first loss amount that ICE NGX is responsible for under the default insurance policy. In the event of a participant default where the Member’s collateral is depleted, the shortfall would be covered by a draw down on the letter of credit following which ICE NGX would file a claim under the default insurance to recover additional losses up to $200 million beyond the $15 million first-loss amount that ICE NGX is responsible for under the default insurance policy.

Clearing House Exposure

The net notional value of unsettled contracts was $2.7 trillion as of June 30, 2022. Each ICE Clearing House bears financial counterparty credit risk and provides a central counterparty guarantee, or performance guarantee, to its Members. To reduce their exposure, the ICE Clearing Houses have a risk management program with both initial and ongoing membership standards. Excluding the effects of original and variation margin, guaranty fund and collateral requirements and default insurance, the ICE Clearing Houses’ maximum estimated exposure for this guarantee is $231.5 billion as of June 30, 2022, which represents the maximum estimated value by the ICE Clearing Houses of a hypothetical one-day movement in pricing of the underlying unsettled contracts. This value was determined using proprietary risk management software that simulates gains and losses based on historical market prices, volatility and other factors present at that point in time for those particular unsettled contracts. Future actual market price volatility could result in the exposure being significantly different than this amount.

13. Legal Proceedings

In the ordinary course of our business, from time to time we are subject to legal proceedings, lawsuits, government investigations and other claims with respect to a variety of matters. In addition, we are subject to periodic reviews, inspections, examinations and investigations by regulators in the U.S. and other jurisdictions, any of which may result in claims, legal proceedings, assessments, fines, penalties, restrictions on our business or other sanctions. We record estimated expenses and reserves for legal or regulatory matters or other claims when these matters present loss contingencies that are probable and the related amount is reasonably estimable. Any such accruals may be adjusted as circumstances change. Assessments of losses are inherently subjective and involve unpredictable factors. While the

outcome of legal and regulatory matters is inherently difficult to predict and/or the range of loss often cannot be reasonably estimable, we do not believe that the liabilities, if any, which may ultimately result from the resolution of the various legal and regulatory matters that arise in the ordinary course of our business, including the matters described below and those described in Note 15 to the consolidated financial statements in Part II, Item 8 of our 2021 Form 10-K, are likely to have a material adverse effect on our consolidated financial condition, results of operations, or liquidity. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially and adversely affected by any developments relating to these legal and regulatory matters. A range of possible losses related to certain cases cannot be reasonably estimated at this time, except as otherwise disclosed below and in Note 15 to the consolidated financial statements in Part II, Item 8 of our 2021 Form 10-K. Individual matter disclosures in this Form 10-Q are limited to new significant matters or significant updates on existing matters since our most recent Form 10-K.

City of Providence Litigation

On March 28, 2022, the district court entered an order granting the defendant exchanges’ (including New York Stock Exchange LLC and NYSE Arca, Inc., two of our subsidiaries) motion for summary judgment on the ground that the plaintiffs lack standing under Article III of the U.S. Constitution, and dismissing without prejudice the plaintiffs’ claims on this basis. Among other things, the district court found that the plaintiffs failed to show that they have been injured and that, even putting aside this defect, the plaintiffs failed to produce evidence from which a jury could reasonably conclude that they suffered an injury traceable to any conduct of the exchanges. The district court also held that the opinions of the plaintiffs’ principal expert witness in this matter were fundamentally flawed and unreliable, and therefore inadmissible. In light of these holdings, the district court denied as moot the plaintiffs’ motion for class certification and the exchanges’ motion for summary judgment on the basis of preclusion. On April 25, 2022, the plaintiffs filed a notice of appeal of the district court's dismissal order. Effective as of June 6, 2022, the parties to the litigation executed settlement agreements pursuant to which, among other things, the plaintiffs withdrew their appeal with prejudice and provided the defendants a covenant not to sue (and additionally provided the NYSE and Cboe Global Markets, Inc. defendants a release of claims). No monetary payment was made by the defendants. The settlement agreements and dismissal of the appeal constitute the final resolution of this matter.

LIBOR Litigation

On February 14, 2022, the U.S. Court of Appeals for the Second Circuit, or the Second Circuit, issued a decision in the appeal of the March 2020 dismissal of the underlying complaint against the defendants, which include ICE and several of our subsidiaries. In its decision, the Second Circuit dismissed the appeal for lack of jurisdiction, holding that DYJ Holdings, LLC, the sole entity attempting to pursue the appeal, lacked standing to do so. The dismissal of the appeal constitutes the final resolution of this matter.

ICE Data Pricing & Reference Data Matter

As of April 28, 2022, our subsidiary ICE Data Pricing & Reference Data, LLC, or PRD, resolved the last known remaining claim of a Live Well Financial, Inc., or Live Well, financial institution creditor relating to PRD’s legacy business practices with respect to broker quotes received from Live Well. With the resolution of this putative claim, there are no known unresolved assertions of liability against PRD relating to broker quotes PRD received from Live Well.

For further information on our legal and regulatory matters, please see Note 15 to the consolidated financial statements in Part II, Item 8 of our 2021 Form 10-K.

14. Fair Value Measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Our financial instruments consist primarily of certain short-term and long-term assets and liabilities, customer accounts receivable, margin deposits and guaranty funds, equity and equity method investments, and short-term and long-term debt.

The fair value of our financial instruments is measured based on a three-level hierarchy:

Level 1 inputs** — quoted prices for identical assets or liabilities in active markets.
Level 2 inputs** — observable inputs other than Level 1 inputs such as quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are directly observable.
Level 3 inputs** — unobservable inputs supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial assets and liabilities recorded or disclosed at fair value in the accompanying consolidated balance sheets as of June 30, 2022 and December 31, 2021 were classified in their entirety based on the lowest level of input that is significant to the asset or liability’s fair value measurement.

Our mutual funds are equity and fixed income mutual funds held for the purpose of providing future payments for our supplemental executive savings plan and the supplemental executive retirement plan. These mutual funds are classified as equity investments and measured at fair value using Level 1 inputs with adjustments recorded in net income.

The fair values of all other financial instruments are determined to materially approximate carrying value due to the short period of time to their maturities.

We did not use Level 3 inputs to determine the fair value of assets or liabilities measured at fair value on a recurring basis as of June 30, 2022 or December 31, 2021.

We measure certain assets, such as intangible assets and equity method investments, at fair value on a non-recurring basis. These assets are recognized at fair value if they are deemed to be impaired. As of June 30, 2022, none of our intangible assets were required to be recorded at fair value since no impairments were recorded.

We measure certain equity investments at fair value on a non-recurring basis using our policy election under ASU 2016-01*.* During the six months ended June 30, 2022, we evaluated these investments and concluded that no fair value adjustments were required under this election related to these investments.

See Note 12 for the fair value considerations related to our margin deposits, guaranty funds and delivery contracts receivable.

The table below displays the fair value of our debt as of June 30, 2022. The fair values of our fixed rate notes were estimated using quoted market prices for these instruments. The fair value of other short-term debt approximates par value since the interest rates on this short-term debt approximate market rates as of June 30, 2022.


	As of June 30, 2022
	(in millions)
Debt:	Carrying Amount		Fair value



Other short-term debt	$	4	$	4



2025 Senior Notes (3.65% senior unsecured notes due May 23, 2025)	1,242		1,242
2025 Senior Notes (3.75% senior unsecured notes due December 1, 2025)	1,247		1,241
2027 Senior Notes (4.00% senior unsecured notes due September 15, 2027)	1,485		1,477
2027 Senior Notes (3.10% senior unsecured notes due September 15, 2027)	497		473
2028 Senior Notes (3.75% senior unsecured notes due September 21, 2028)	594		577
2029 Senior Notes (4.35% senior unsecured notes due June 15, 2029)	1,239		1,234
2030 Senior Notes (2.10% senior unsecured notes due June 15, 2030)	1,235		1,048
2032 Senior Notes (1.85% senior unsecured notes due September 15, 2032)	1,484		1,176
2033 Senior Notes (4.60% senior unsecured notes due March 15, 2033)	1,487		1,492
2040 Senior Notes (2.65% senior unsecured notes due September 15, 2040)	1,230		919
2048 Senior Notes (4.25% senior unsecured notes due September 21, 2048)	1,231		1,118
2050 Senior Notes (3.00% senior unsecured notes due June 15, 2050)	1,221		913
2052 Senior Notes (4.95% senior unsecured notes due June 15, 2052)	1,463		1,478
2060 Senior Notes (3.00% senior unsecured notes due September 15, 2060)	1,471		1,018
2062 Senior Notes (5.20% senior unsecured notes due June 15, 2062)	983		1,000
Total debt	$	18,113	$	16,410

15. Segment Reporting

Our business is conducted through three reportable business segments, comprised of the following:

In our Exchanges segment, we operate regulated marketplaces for the listing, trading and clearing of a broad array of derivatives contracts and financial securities;
In our Fixed Income and Data Services segment, we provide fixed income pricing, reference data, indices, analytics and execution services as well as global CDS clearing and multi-asset class data delivery solutions; and
In our Mortgage Technology segment, we provide an end-to-end technology platform that offers customers comprehensive, digital workflow tools that aim to address the inefficiencies that exist in the U.S. residential mortgage market, from application through closing and the secondary market.

While revenues are recorded specifically in the segment in which they are earned or to which they relate, a significant portion of our operating expenses are not solely related to a specific segment because the expenses serve functions that are necessary for the operation of more than one segment. We directly allocate expenses when reasonably possible to do so. Otherwise, we use a pro-rata revenue approach as the allocation method for the expenses that do not relate solely to one segment and serve functions that are necessary for the operation of all segments.

Our chief operating decision maker does not review total assets or statements of income below operating income by segments; therefore, such information is not presented below. Our three segments do not engage in intersegment transactions.

Financial data for our business segments is as follows for the six months and three months ended June 30, 2022 and 2021 (in millions):


	Six Months Ended June 30, 2022
	Exchanges		Fixed Income and Data Services		Mortgage Technology		Consolidated
Revenues:
Energy futures and options	$	618	$	—	$	—	$	618
Agricultural and metals futures and options	122		—		—		122
Financial futures and options	253		—		—		253
Cash equities and equity options	1,357		—		—		1,357
OTC and other	205		—		—		205
Data and connectivity services	432		—		—		432
Listings	260		—		—		260
Fixed income execution	—		40		—		40
CDS clearing	—		138		—		138
Fixed income data and analytics	—		551		—		551
Other data and network services	—		292		—		292
Origination technology	—		—		399		399
Closing solutions	—		—		134		134
Data and analytics	—		—		44		44
Other	—		—		27		27
Revenues	3,247		1,021		604		4,872
Transaction-based expenses	1,159		—		—		1,159
Revenues, less transaction-based expenses	2,088		1,021		604		3,713
Operating expenses	603		692		557		1,852
Operating income	$	1,485	$	329	$	47	$	1,861


	Six Months Ended June 30, 2021
	Exchanges		Fixed Income and Data Services		Mortgage Technology		Consolidated
Revenues:
Energy futures and options	$	584	$	—	$	—	$	584
Agricultural and metals futures and options	121		—		—		121
Financial futures and options	188		—		—		188
Cash equities and equity options	1,246		—		—		1,246
OTC and other	155		—		—		155
Data and connectivity services	415		—		—		415
Listings	233		—		—		233
Fixed income execution	—		27		—		27
CDS clearing	—		93		—		93
Fixed income data and analytics	—		532		—		532
Other data and network services	—		274		—		274
Origination technology	—		—		495		495
Closing solutions	—		—		139		139
Data and analytics	—		—		36		36
Other	—		—		25		25
Revenues	2,942		926		695		4,563
Transaction-based expenses	1,059		—		—		1,059
Revenues, less transaction-based expenses	1,883		926		695		3,504
Operating expenses	647		672		494		1,813
Operating income	$	1,236	$	254	$	201	$	1,691


	Three Months Ended June 30, 2022
	Exchanges		Fixed Income and Data Services		Mortgage Technology		Consolidated
Revenues:
Energy futures and options	$	265	$	—	$	—	$	265
Agricultural and metals futures and options	61		—		—		61
Financial futures and options	123		—		—		123
Cash equities and equity options	698		—		—		698
OTC and other	108		—		—		108
Data and connectivity services	218		—		—		218
Listings	131		—		—		131
Fixed income execution	—		25		—		25
CDS clearing	—		66		—		66
Fixed income data and analytics	—		274		—		274
Other data and network services	—		147		—		147
Origination technology	—		—		196		196
Closing solutions	—		—		64		64
Data and analytics	—		—		24		24
Other	—		—		13		13
Revenues	1,604		512		297		2,413
Transaction-based expenses	599		—		—		599
Revenues, less transaction-based expenses	1,005		512		297		1,814
Operating expenses	304		338		303		945
Operating income/(loss)	$	701	$	174	$	(6)	$	869


	Three Months Ended June 30, 2021
	Exchanges		Fixed Income and Data Services		Mortgage Technology		Consolidated
Revenues:
Energy futures and options	$	274	$	—	$	—	$	274
Agricultural and metals futures and options	62		—		—		62
Financial futures and options	83		—		—		83
Cash equities and equity options	512		—		—		512
OTC and other	78		—		—		78
Data and connectivity services	208		—		—		208
Listings	119		—		—		119
Fixed income execution	—		13		—		13
CDS clearing	—		38		—		38
Fixed income data and analytics	—		268		—		268
Other data and network services	—		139		—		139
Origination technology	—		—		241		241
Closing solutions	—		—		69		69
Data and analytics	—		—		18		18
Other	—		—		12		12
Revenues	1,336		458		340		2,134
Transaction-based expenses	427		—		—		427
Revenues, less transaction-based expenses	909		458		340		1,707
Operating expenses	326		337		245		908
Operating income	$	583	$	121	$	95	$	799

Revenue from one member of the Exchanges segment comprised $213 million, or 10%, of our Exchange revenues, less transaction-based expenses for the six months ended June 30, 2022 and no customers or clearing members accounted for more than 10% of our Exchange revenues, less transaction-based expenses during the three months ended June 30, 2022. Revenue from one member of the Exchanges segment comprised $208 million, or 11%, and $99 million, or 11%, of our Exchange revenues, less transaction-based expenses for the six months and three months ended June 30, 2021, respectively. Clearing members are primarily intermediaries and represent a broad range of principal trading firms. If a clearing member ceased its operations, we believe that the trading firms would continue to conduct transactions and would clear those transactions through another clearing member firm. No additional customers or clearing members accounted for more than 10% of our segment revenues or consolidated revenues during the six months and three months ended June 30, 2022 or 2021.

16. Earnings Per Common Share

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per common share computations for the six months and three months ended June 30, 2022 and 2021 (in millions, except per share amounts):


	Six Months Ended June 30,					Three Months Ended June 30,
2022			2021	2022				2021
Basic:
Net income attributable to Intercontinental Exchange, Inc.	$	1,212		$	1,898	$	555		$	1,252
Weighted average common shares outstanding	560			562		558			563
Basic earnings per common share	$	2.17		$	3.38	$	0.99		$	2.23
Diluted:
Weighted average common shares outstanding	560			562		558			563
Effect of dilutive securities - stock options and restricted stock	2			3		2			2
Diluted weighted average common shares outstanding	562			565		560			565
Diluted earnings per common share	$	2.16		$	3.36	$	0.99		$	2.22

Basic earnings per common share is calculated using the weighted average common shares outstanding during the period.

Common equivalent shares from stock options and restricted stock awards, calculated using the treasury stock method, are included in the diluted per share calculations unless the effect of their inclusion would be antidilutive. During the six months ended June 30, 2022 and 2021, 1 million and 0.3 million outstanding stock options and restricted stock awards, respectively, were not included in the computation of diluted earnings per common share, because to do so would have had an antidilutive effect. In addition, for the six months ended June 30, 2021, we excluded warrants and preferred and common incentive units under the Bakkt Equity Incentive Plan because they were also antidilutive. Certain figures in the table above may not recalculate due to rounding.

17. Subsequent Events

We have evaluated subsequent events, and determined that no events or transactions met the definition of a subsequent event for purposes of recognition or disclosure in the accompanying consolidated financial statements.

Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS