Nasdaq 10-K 2020-12-31

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________

FORM 10-K

Commission file number: 001-38855

___________________________________

Nasdaq, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: +1 212 401 8700

Securities registered pursuant to Section 12(b) of the Act:

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

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

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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

As of June 30, 2020, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $13.6 billion (this amount represents approximately 114.4 million shares of Nasdaq, Inc.’s common stock based on the last reported sales price of $119.47 of the common stock on The Nasdaq Stock Market on such date).

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

Nasdaq, Inc.

i

About this Form 10-K

Throughout this Form 10-K, unless otherwise specified:

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

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

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

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

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

• “Nasdaq CXC” and “Nasdaq CX2” refer to the Canadian cash equity trading books operated by Nasdaq CXC Limited.

• “Nasdaq First North” refers to our alternative marketplaces for smaller companies and growth companies in the Nordic and Baltic regions.

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

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

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

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

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

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

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

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

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

401(k) Plan: Voluntary Defined Contribution Savings Plan

2017 Credit Facility: $1 billion senior unsecured revolving credit facility, which was terminated in December 2020

2020 Credit Facility: $1.25 billion senior unsecured revolving credit facility, which matures on December 22, 2025

2021 Notes: €600 million aggregate principal amount of 3.875% senior unsecured notes due June 7, 2021, repaid in full and terminated in March 2020

2022 Notes: $600 million aggregate principal amount of 0.455% senior unsecured notes due December 21, 2022

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

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

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

2029 Notes: €600 million aggregate principal amount of 1.75% senior unsecured notes due March 28, 2029

2030 Notes: €600 million aggregate principal amount of 0.875% senior unsecured notes due February 13, 2030

2031 Notes: $650 million aggregate principal amount of 1.650% senior unsecured notes due January 15, 2031

2040 Notes: $650 million aggregate principal amount of 2.500% senior unsecured notes due December 21, 2040

2050 Notes: $500 million aggregate principal amount of 3.25% senior unsecured notes due April 28, 2050

ASU: Accounting Standards Update

ATS: Alternative Trading System

ASU 2016-13: Measurement of Credit Losses on Financial Instruments

AUM: Assets Under Management

CAT: A market-wide consolidated audit trail established under an SEC approved plan by Nasdaq and other exchanges

CCP: Central Counterparty

CFTC: U.S. Commodity Futures Trading Commission

EMIR: European Market Infrastructure Regulation

Equity Plan: Nasdaq Equity Incentive Plan

ESG: Environmental, Social and Governance

ESPP: Nasdaq Employee Stock Purchase Plan

ii

ETF: Exchange Traded Fund

ETP: Exchange Traded Product

Exchange Act: Securities Exchange Act of 1934, as amended

FASB: Financial Accounting Standards Board

FICC: Fixed Income and Commodities Trading and Clearing

FINRA: Financial Industry Regulatory Authority

IPO: Initial Public Offering

LIBOR: London Interbank Offered Rate

MiFID II: Update to the Markets in Financial Instruments Directive

MiFIR: Markets in Financial Instruments Regulation

MTF: Multilateral Trading Facility

NFF: Nasdaq Financial Framework; Nasdaq's end-to-end technology solutions for market infrastructure operators, buy-side firms, sell-side firms and other non-financial markets

NFX: Nasdaq Futures, Inc.

NPM: The NASDAQ Private Market, LLC

NSCC: National Securities Clearing Corporation

OCC: The Options Clearing Corporation

OTC: Over-the-Counter

Proxy Statement: Nasdaq's Definitive Proxy Statement for the 2021 Annual Meeting of Shareholders

PSU: Performance Share Unit

Regulation NMS: Regulation National Market System

Regulation SCI: Regulation Systems Compliance and Integrity

SaaS: Software as a Service

SEC: U.S. Securities and Exchange Commission

SERP: Supplemental Executive Retirement Plan

SFSA: Swedish Financial Supervisory Authority

SI: Systematic Internalizer

S&P: Standard & Poor’s

S&P 500: S&P 500 Stock Index

SPAC: Special Purpose Acquisition Company

SRO: Self-regulatory Organization

SSMA: Swedish Securities Markets Act 2007:528

TSR: Total Shareholder Return

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

UTP: Unlisted Trading Privileges

UTP Plan: Joint SRO Plan Governing the Collection, Consolidation, and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on a UTP Basis

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

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

Nasdaq intends to use its website, ir.nasdaq.com, as a means for disclosing material non-public information and for complying with SEC Regulation FD and other disclosure obligations.

iii

Forward-Looking Statements

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

*•*our strategic direction;

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

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

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

• our products and services;

• the impact of pricing changes;

• tax matters;

• the cost and availability of liquidity and capital;

*•*any litigation, or any regulatory or government investigation or action, to which we are or could become a party or which may affect us; and

*•*the potential impact of the COVID-19 pandemic and the response of governments and other third parties on our business, operations, results of operations, financial condition, workforce or the operations or decisions of our customers, suppliers or business partners.

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

*•*our operating results may be lower than expected;

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

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

*•*our ability to develop and grow our non-trading businesses, including our technology and analytics offerings;

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

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

• the performance and reliability of our technology and technology of third parties on which we rely;

• any significant error in our operational processes;

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

*•*adverse changes that may occur in the litigation or regulatory areas, or in the securities markets generally, or increased regulatory oversight domestically or internationally.

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

PART I

Overview

Nasdaq is a global technology company serving the capital markets and other industries. Our diverse offerings of data, analytics, software and services enables clients to optimize and execute their business vision with confidence.

We manage, operate and provide our products and services in four business segments: Market Services, Corporate Platforms, Investment Intelligence and Market Technology. In the fourth quarter of 2020, we renamed certain of our segments and businesses. See Note 1, “Organization and Nature of Operations,” to the consolidated financial statements for further discussion.

History

Nasdaq was founded in 1971 as a wholly-owned subsidiary of FINRA. Beginning in 2000, FINRA restructured and broadened ownership in Nasdaq by selling shares to FINRA members, investment companies and issuers listed on The Nasdaq Stock Market. In connection with this restructuring, FINRA fully divested its ownership of Nasdaq in 2006, and The Nasdaq Stock Market became an independent registered national securities exchange in 2007.

In February 2008, Nasdaq and OMX AB combined their businesses, and we changed our corporate name to The NASDAQ OMX Group, Inc. This transformational combination resulted in the expansion of our business from a U.S.-based exchange operator to a global exchange company offering technology that powers our own exchanges and markets as well as many other marketplaces around the world. We operated as the NASDAQ OMX Group until we rebranded our business as Nasdaq, Inc. in 2015. The chart below shows our historical evolution from 1971 through the present.

Growth Strategy

Since our transformative combination with OMX AB in 2008, we have grown our business both organically and through acquisitions that have expanded our operations globally and increasingly diversified our product and service offerings. This evolution was driven by our ability to create opportunities in areas adjacent to our core businesses, many

of which are non-transaction based and rooted in innovative technology. To keep pace with our understanding of future trends and to ensure our continued success in the evolving business environment, we have focused on refining our vision, mission, purpose and strategy:

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

Our Mission: To provide the premier platform and ecosystem for global capital markets and beyond with unmatched technology, insights and markets expertise.

Our Purpose: To champion inclusive growth and prosperity. We power stronger economies, create more equitable opportunities and contribute to a more sustainable world to help our communities, clients, employees and people of all backgrounds reach their full potential.

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

Under the strategic direction that we have been implementing over the past four years, we have focused on maximizing the resources, people and capital allocated to our largest growth opportunities, particularly in our Market Technology and Investment Intelligence segments, as we seek to execute on our transformation into a higher growth, more scalable platform to meet our clients' most critical needs. We are also committed to maintaining and enhancing the marketplace platform businesses that are core to Nasdaq, including Market Services and Corporate Platforms. Additionally, we will continue to execute on our strategy to reduce capital and resources in areas that we believe are not as strategic to our clients and have less growth potential within Nasdaq. Our four business segments reflect our broad capabilities, with Market Technology and Investment Intelligence providing our technology and intelligence growth platform, and Corporate Platforms and Market Services serving as our foundational marketplace core.

• Increasing Investment in Businesses Where We See the Highest Growth Opportunity. We have increased investment in areas that we believe help solve our clients’ biggest challenges and are likely to generate growth for our stockholders. These areas include: the index and analytics business within our Investment Intelligence segment; ESG-focused solutions, within our Corporate Platforms segment; and our Market Technology segment (including our anti-financial crime technology business).

Consistent with this objective, in 2020 we acquired Solovis, a provider of multi-asset class portfolio management, analytics and reporting tools across public and private markets, which is a part of our Investment Intelligence segment. In February 2021, we completed the acquisition of Verafin, a provider of anti-financial

crime management solutions, which is part of our Market Technology segment. We are continuing to invest in the Market Technology segment through the expansion, enhancement, and flexibility of our technology platform, in addition to leveraging emerging technologies such as machine intelligence in our Trade Surveillance offering.

• Enhancing Our Foundation. As we strive to grow our business, we also have focused on enhancing our leadership position in the marketplaces in which we operate as we continue to innovate with new functionality and strong market share in our core markets. We migrated Nasdaq BX Options to a new trading platform that leverages the NFF. This updated technology will drive commonality across our internal derivatives markets.

• Optimizing Slower Growth Businesses. We continually review areas that are not critical to our core. In these areas, we expect to continue to target resiliency and efficiency versus growth, and free up resources when possible to redirect toward greater opportunities. In February 2021, we entered into an agreement to sell our U.S. fixed income business. This transaction aligns with our strategy to concentrate our resources and capital in order to maximize our potential as a major technology and analytics provider to the global capital markets. See “Sale of U.S. Fixed Income Business,” of Note 21, “Subsequent Events,” to the consolidated financial statements for further discussion of this transaction.

Products and Services

Market Services

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

Equity Derivative Trading and Clearing

We operate six options exchanges in the U.S.: Nasdaq PHLX, The Nasdaq Options Market, Nasdaq BX Options, Nasdaq ISE, Nasdaq GEMX and Nasdaq MRX. These exchanges facilitate the trading of equity, ETF, index and foreign currency options. Together, our combined options market share in 2020 represented the largest share of the U.S. market for all categories, including single-exchange-listed options products. Our options trading platforms provide trading opportunities to both retail investors, algorithmic trading firms and market makers, who tend to prefer electronic trading, and institutional investors, who typically pursue more complex trading strategies and often trade on the floor.

In Europe, Nasdaq offers trading in derivatives, such as stock options and futures and index options and futures. Nasdaq Clearing offers central counterparty clearing services for stock options and futures and index options and futures.

Cash Equity Trading

In the U.S., we operate three cash equity exchanges: The Nasdaq Stock Market, Nasdaq BX and Nasdaq PSX. Our U.S. cash equity exchanges offer trading of both Nasdaq-listed and non-Nasdaq-listed securities. The Nasdaq Stock Market is the largest single venue of liquidity for trading U.S.-listed cash equities. Market participants include ma

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The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. If any of

the following risks actually occur, our business, financial condition, or operating results could be adversely affected.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

The COVID-19 pandemic could have an adverse effect on our business, financial condition, liquidity or results of operations.

We are continuing to closely monitor the evolving impact of the COVID-19 pandemic on our industry and business in the United States and worldwide, including its effect on our customers, employees, vendors and other stakeholders. The COVID-19 pandemic has created significant volatility, uncertainty and economic disruption, which may adversely affect our business, financial condition, liquidity or results of operations.

While results in our Market Services segment were strong in 2020, reflecting elevated trading volumes amidst the COVID-19 pandemic, there is no assurance that such trading levels will continue. In our Corporate Platforms segment, while we have experienced strong demand for IPOs in 2020, we cannot predict whether investor demand for IPOs and new listings will continue in the future. We continue to observe that certain Market Technology customers are delaying purchasing decisions or extending implementation schedules. While our licensed ETPs, and in particular our Nasdaq-100 index, have grown due to the increases in the market and net inflows, there is no assurance that such AUM levels or volume trends will continue in the future.

As the COVID-19 pandemic and its resultant economic effects continue, existing customers in each of our segments may reduce or cancel spending for our products and services. Additionally, our sales pipeline with new client prospects may be further affected as new clients may delay or cancel purchase decisions while they evaluate the continuing impact of COVID-19.

In response to COVID-19, we have shifted to having a majority of our staff work from home and have added additional network capacity and monitoring. However, such remote work may cause heightened cybersecurity and operational risks. Certain of our global offices have re-opened on a limited basis, with applicable safety protocols in place, or expect to re-open subject to limitations during 2021. We could face disruption to our business or operations if a significant number of our employees or any of our key employees becomes ill due to the virus. We have filed a proposal with the SEC to amend Nasdaq PHLX’s business continuity plan to permit a virtual trading crowd, which would allow Nasdaq PHLX to operate its trading floor remotely in the event the physical trading floor becomes unavailable due to COVID-19. If our pending rule change is not approved by the SEC, and Nasdaq PHLX is unable to operate its physical trading floor due to COVID-19 or other restrictions, our revenue, market share and reputation may be adversely affected. If the rule change is approved by the SEC and we are unable to successfully operate the virtual trading

crowd in compliance with the SEC rules, our revenues and reputation may be harmed. Any disruption to our ability to deliver services to our clients could result in liability to our customers, regulatory fines, penalties or other sanctions, increased operational costs or harm to our reputation and brand. This, in turn, may have an adverse effect on our business, financial condition, liquidity or results of operations.

The extent to which the COVID-19 pandemic impacts our business, financial condition, liquidity or results of operations will depend on future developments, which are uncertain and cannot be predicted, including the scope and duration of the COVID-19 pandemic, the length of time government, commercial and travel limitations are in place, the continued effectiveness of our remote work arrangements, actions taken by governmental authorities, regulators and other third parties in response to the pandemic, as well as other direct and indirect impacts on us, our exchanges, our customers, our vendors and other stakeholders.

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

Our business performance is impacted by a number of factors, including general economic conditions, market volatility, changes in investment patterns and priorities, pandemics and other factors that are generally beyond our control. To the extent that global or national economic conditions weaken and result in slower growth or recessions, our business is likely to be negatively impacted. Adverse market conditions could reduce customer demand for our services and the ability of our customers, lenders and other counterparties to meet their obligations to us. Poor economic conditions may result in a reduction in the demand for our products and services, including our market technology, data, indexes and IR & ESG Services, a decline in trading volumes or values and deterioration of the economic welfare of our listed companies.

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

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

Investment Intelligence revenues may be significantly affected by global economic conditions. Professional subscriptions to our data products are at risk if staff

reductions occur in financial services companies or if our customers consolidate, which could result in significant reductions in our professional user revenue or expose us to increased risks relating to dependence on a smaller number of customers. In addition, adverse market conditions may cause reductions in the number of non-professional investors with investments in the market and in ETP AUM tracking Nasdaq indexes as well as trading in futures linked to Nasdaq indexes.

There may be less demand for our IR & ESG Services or Market Technology products if global economic conditions are weak. Our customers historically cut back on purchases of new services and technology when growth rates decline, thereby reducing our opportunities to sell new products and services or upgrade existing products and services.

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

The industries we operate in are highly competitive.

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

The liberalization and globalization of world markets has resulted in greater mobility of capital, greater international participation in local markets and more competition. As a result, both in the U.S. and in other countr

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None.

We conduct our business operations in leased facilities. We do not own any real property. Our U.S. headquarters are located in New York, New York, and our European

headquarters are located in Stockholm, Sweden. We also lease space in multiple locations around the world, which are used for research and development, sales and support, and administrative activities, as well as for data centers and disaster preparedness facilities.

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

See “Legal and Regulatory Matters - Litigation,” of Note 18, “Commitments, Contingencies and Guarantees,” to the consolidated financial statements, which is incorporated herein by reference.

Not applicable.

PART II

Market Information

Our common stock is listed on The Nasdaq Stock Market under the ticker symbol “NDAQ.” As of February 11, 2021, we had approximately 229 holders of record of our common stock.

Issuer Purchases of Equity Securities

Share Repurchase Program

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

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The table below represents repurchases made by or on behalf of us or any “affiliated purchaser” of our common stock during the fiscal quarter ended December 31, 2020:

____________

N/A Not applicable.

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

(2) Represents shares surrendered to us to satisfy tax withholding obligations arising from the vesting of restricted stock and PSUs issued to employees.

PERFORMANCE GRAPH

The following graph compares the total return of our common stock to the Nasdaq Composite Index, the S&P 500 and a peer group selected by us, shown below, for the past five years:

The figures represented below assume an initial investment of $100 in the common stock or index at the closing price on December 31, 2015 and the reinvestment of all dividends.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

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

• $100 invested on 12/31/2015 in stock or index, including reinvestment of dividends.

Copyright© 2020 Standard & Poor's, a division of S&P Global. All rights reserved.

As a result of our early adoption, in December 2020, of SEC Final Rule Release No. 33-10890, “Management's Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information,” this item has been omitted.

The following discussion and analysis of the financial condition and results of operations of Nasdaq should be read in conjunction with our consolidated financial statements and related notes included in this Form 10-K, as well as the discussion under “Item 1A. Risk Factors.” For further discussion of our growth strategy, products and services, and competitive strengths, see “Item 1. Business.” Unless stated otherwise, the comparisons presented in this discussion and analysis refer to the year-over-year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended December 31, 2020 and December 31, 2019. Discussion of fiscal year 2018 items and the year-over year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended December 31, 2019 and December 31, 2018 can be found in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was previously filed with the SEC on February 25, 2020.

Business Segments

We manage, operate and provide our products and services in four business segments: Market Services, Corporate Platforms, Investment Intelligence and Market Technology. See Note 1, “Organization and Nature of Operations,” and Note 19, “Business Segments,” to the consolidated financial statements for further discussion of our reportable segments and geographic data, as well as how management allocates resources, assesses performance and manages these businesses as four separate segments.

Impact of COVID-19 on Our Business

For a discussion of the impact of COVID-19 on our business, see “Item 1A. Risk Factors - Risks Related To Our Business and Industry - The COVID-19 pandemic could have an adverse effect on our business, financial condition, liquidity or results of operations,” and “Liquidity and Capital Resources.”

Sources of Revenues and Transaction-Based Expenses

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

Nasdaq’s Operating Results

Key Drivers

The following table and charts include key drivers and other metrics for our Market Services, Corporate Platforms, Investment Intelligence and Market Technology segments. In evaluating the performance of our business, our senior management closely evaluates these key drivers.

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

Nasdaq’s consolidated financial statements, including Consolidated Balance Sheets as of December 31, 2020 and 2019, Consolidated Statements of Income for the years ended December 31, 2020, 2019 and 2018, Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018, Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2020, 2019 and 2018, Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 and notes to our consolidated financial statements, together with a report thereon of Ernst & Young LLP, dated February 23, 2021, are attached hereto as pages F-1 through F-46 and incorporated by reference herein.

Summarized Quarterly Financial Data (Unaudited)

As a result of our early adoption, in December 2020, of SEC Final Rule Release No. 33-10890, “Management's Discussion and Analysis, Selected Financial Data, and Supplementary

Financial Information,” this data has been omitted.

None.

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

Changes in internal control over financial reporting. There have been no changes in Nasdaq’s internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, Nasdaq’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

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

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

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework). This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on its assessment, our management believes that, as of December 31, 2020, our internal control over financial reporting is effective.

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

Report of Independent Registered Public Accounting Firm

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

Opinion on Internal Control over Financial Reporting

We have audited Nasdaq, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Nasdaq, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated February 23, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

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

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

/s/ Ernst & Young LLP

New York, New York

February 23, 2021

None.

PART III

Information about Nasdaq’s directors, as required by Item 401 of Regulation S-K, is incorporated by reference from the discussion under the caption “Board of Directors-Proposal 1: Election of Directors” in Nasdaq’s Proxy Statement. Information about Nasdaq’s executive officers, as required by Item 401 of Regulation S-K, is incorporated by reference from the discussion under the caption “Other Items-Executive Officers” in the Proxy Statement. Information about Section 16 reports, as required by Item 405 of Regulation S-K, is incorporated by reference from the discussion under the caption “Other Items-Delinquent Section 16(a) Reports” in the Proxy Statement. Information about Nasdaq’s code of ethics, as required by Item 406 of Regulation S-K, is incorporated by reference from the discussion under the caption “Our Ethical Culture” in the Proxy Statement. Information about Nasdaq’s nomination procedures, Audit & Risk Committee and Audit & Risk

Committee financial experts, as required by Items 407(c)(3), 407(d)(4) and 407(d)(5) of Regulation S-K, is incorporated by reference from the discussions under the headings “Board of Directors-Proposal 1: Election of Directors” and “Board of Directors-Board Committees” in the Proxy Statement.

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

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

Equity Compensation Plan and ESPP Information

Nasdaq’s Equity Plan provides for the issuance of our equity securities to all employees and directors as part of their compensation plan, though employees in certain of our locations may be ineligible due to local securities laws and regulations.

In addition, in jurisdictions where participation in the ESPP is permitted, all our employees are eligible. Employees may purchase shares of our common stock at a 15% discount to the lesser of the closing price of our common stock on (i) the first trading day of the offering period or (ii) the last trading day of the offering period. Offering periods under the ESPP are six months in duration. As of December 31, 2020, over 99.0% of our employees are eligible to participate.

The Equity Plan and the ESPP have been previously approved by our stockholders. The following table sets forth information regarding outstanding options and shares reserved for future issuance under all of Nasdaq’s compensation plans as of December 31, 2020.

(1) The amounts in this column include only the number of shares to be issued upon exercise of outstanding options, warrants and rights. As of December 31, 2020, we also had 2,618,588 shares to be issued upon vesting of outstanding restricted stock and PSUs.

(2) This amount includes 9,837,094 shares of common stock that may be awarded pursuant to the Equity Plan and 4,433,764 shares of common stock that may be issued pursuant to the ESPP.

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

herein by reference from the discussion under the heading “Board of Directors-Proposal 1: Election of Directors” in the Proxy Statement.

Information about principal accounting fees and services, as required by Item 9(e) of Schedule 14A, is incorporated herein by reference from the discussion under the heading “Audit & Risk Committee Matters-Annual Evaluation and 2021 Selection of Independent Auditors” in the Proxy Statement.

PART IV

(a)(1) Financial Statements

See “Index to Consolidated Financial Statements.”

(a)(2) Financial Statement Schedules

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

(a)(3) Exhibits

Exhibit Index

• Management contract or compensatory plan or arrangement.

† Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

(b) Exhibits:

See Item 15(a)(3) above.

(c) Financial Statement Schedules:

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

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 23, 2021.

Nasdaq, Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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

F-1

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nasdaq, Inc. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 23, 2021 expressed an unqualified opinion thereon.

Adoption of ASU No. 2016-02

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842).

Basis for Opinion

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures t

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