Item 1. Financial Statements

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Item 1. Financial Statements

Nasdaq, Inc.

Condensed Consolidated Balance Sheets

(in millions, except share and par value amounts)


	September 30, 2021		December 31, 2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	303	$	2,745
Restricted cash and cash equivalents	29		37
Financial investments	185		195
Receivables, net	552		566
Default funds and margin deposits	4,202		3,942
Other current assets	225		175
Total current assets	5,496		7,660
Property and equipment, net	495		475
Goodwill	8,510		6,850
Intangible assets, net	2,885		2,255
Operating lease assets	383		381
Other non-current assets	628		358
Total assets	$	18,397	$	17,979

Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	166	$	175
Section 31 fees payable to SEC	14		224
Accrued personnel costs	221		227
Deferred revenue	380		235
Other current liabilities	132		121
Default funds and margin deposits	4,202		3,942
Short-term debt	480		—
Total current liabilities	5,595		4,924
Long-term debt	5,447		5,541
Deferred tax liabilities, net	395		502
Operating lease liabilities	398		389
Other non-current liabilities	207		187
Total liabilities	12,042		11,543

Commitments and contingencies

Equity
Nasdaq stockholders’ equity:
Common stock, $0.01 par value, 300,000,000 shares authorized, shares issued: 173,886,216 at September 30, 2021 and 171,278,761 at December 31, 2020; shares outstanding: 167,206,649 at September 30, 2021 and 164,933,678 at December 31, 2020	2		2
Additional paid-in capital	1,983		2,547
Common stock in treasury, at cost: 6,679,567 shares at September 30, 2021 and 6,345,083 shares at December 31, 2020	(425)		(376)
Accumulated other comprehensive loss	(1,511)		(1,368)
Retained earnings	6,296		5,628
Total Nasdaq stockholders’ equity	6,345		6,433
Noncontrolling interests	10		3
Total equity	6,355		6,436
Total liabilities and equity	$	18,397	$	17,979

See accompanying notes to condensed consolidated financial statements.

Nasdaq, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(in millions, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

Revenues:
Market Technology	$	114	$	86	$	332	$	251
Investment Intelligence	272		236		787		654
Corporate Platforms	155		131		451		382
Market Services	814		954		2,823		2,855
Other revenues	2		6		26		21
Total revenues	1,357		1,413		4,419		4,163
Transaction-based expenses:
Transaction rebates	(472)		(517)		(1,642)		(1,525)
Brokerage, clearance and exchange fees	(47)		(181)		(243)		(523)
Revenues less transaction-based expenses	838		715		2,534		2,115
Operating expenses:
Compensation and benefits	230		198		700		582
Professional and contract services	36		38		101		96
Computer operations and data communications	47		39		137		109
Occupancy	27		29		81		80
General, administrative and other	42		13		66		99
Marketing and advertising	12		7		32		20
Depreciation and amortization	67		51		197		149
Regulatory	8		2		22		16
Merger and strategic initiatives	13		1		70		12
Restructuring charges	—		11		31		36
Total operating expenses	482		389		1,437		1,199
Operating income	356		326		1,097		916
Interest income	—		—		1		4
Interest expense	(33)		(24)		(95)		(77)

Net gain on divestiture of business	—		—		84		—

Other income	42		1		43		5
Net income from unconsolidated investees	6		54		90		97
Income before income taxes	371		357		1,220		945
Income tax provision	83		93		292		237


Net income attributable to Nasdaq	$	288	$	264	$	928	$	708
Per share information:
Basic earnings per share	$	1.72	$	1.61	$	5.61	$	4.31
Diluted earnings per share	$	1.69	$	1.58	$	5.53	$	4.25
Cash dividends declared per common share	$	0.54	$	0.49	$	1.57	$	1.45

See accompanying notes to condensed consolidated financial statements.

Nasdaq, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(in millions)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	288	$	264	$	928	$	708
Other comprehensive income (loss):
Foreign currency translation gains (losses)	(45)		60		(112)		29
Income tax benefit (expense)(1)	(14)		23		(31)		25
Foreign currency translation, net	(59)		83		(143)		54






Comprehensive income attributable to Nasdaq	$	229	$	347	$	785	$	762

____________

(1) Primarily relates to the tax effect of unrealized gains and losses on Euro denominated notes.

See accompanying notes to condensed consolidated financial statements.

Nasdaq, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

(in millions)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	Shares	$		Shares	$		Shares	$		Shares	$
Common stock	169	2		164	2		165	2		165	2

Additional paid-in capital
Beginning balance		2,435			2,533			2,547			2,632
Share repurchase program	—	—		—	(34)		(3)	(410)		(2)	(186)
ASR agreement(1)	(2)	(475)		—	—		(2)	(475)		—	—
Share-based compensation	—	23		—	24		1	66		1	64
Stock option exercises, net	—	—		—	1		—	1		—	2
Other issuances of common stock, net(2)	—	—		—	—		6	254		—	12
Ending balance		1,983			2,524			1,983			2,524

Common stock in treasury, at cost
Beginning balance		(423)			(367)			(376)			(336)
Other employee stock activity	—	(2)		—	—		—	(49)		—	(31)
Ending balance		(425)			(367)			(425)			(367)

Accumulated other comprehensive loss
Beginning balance		(1,452)			(1,715)			(1,368)			(1,686)
Other comprehensive income (loss)		(59)			83			(143)			54

Ending balance		(1,511)			(1,632)			(1,511)			(1,632)

Retained earnings
Beginning balance		6,098			5,301			5,628			5,027
Impact of adoption of ASU 2016-13		—			—			—			(12)
Net income		288			264			928			708

Cash dividends declared per common share		(90)			(81)			(260)			(239)
Ending balance		6,296			5,484			6,296			5,484

Total Nasdaq stockholders’ equity		6,345			6,011			6,345			6,011

Noncontrolling interests
Beginning balance		11			3			3			—
Net activity related to noncontrolling interests		(1)			—			7			3
Ending balance		10			3			10			3

Total Equity	167	$	6,355	164	$	6,014	167	$	6,355	164	$	6,014

____________

(1) See “ASR Agreement,” of Note 11, “Nasdaq Stockholders’ Equity,” for further discussion.

(2) For the nine months ended September 30, 2021 primarily relates to the tax impact of shares accelerated and issued upon the sale of our U.S. Fixed Income business. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

See accompanying notes to condensed consolidated financial statements.

Nasdaq, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in millions)


	Nine Months Ended September 30,
	2021		2020

Cash flows from operating activities:
Net income	$	928	$	708
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	197		149
Share-based compensation	66		64
Deferred income taxes	94		19

Extinguishment of debt	33		36
Net gain on divestiture of business	(84)		—



Net income from unconsolidated investees	(90)		(97)
Other reconciling items included in net income	9		26
Net change in operating assets and liabilities, net of effects of acquisitions:
Receivables, net	32		(109)
Other assets	(142)		43
Accounts payable and accrued expenses	(4)		(18)
Section 31 fees payable to SEC	(210)		(69)
Accrued personnel costs	(5)		(6)
Deferred revenue	138		70
Other liabilities(1)	(263)		1

Net cash provided by operating activities	699		817
Cash flows from investing activities:
Purchases of securities	(269)		(252)
Proceeds from sales and redemptions of securities	266		372


Proceeds from divestiture of business, net of cash divested	190		—

Acquisition of businesses, net of cash and cash equivalents acquired	(2,430)		(157)
Purchases of property and equipment	(113)		(128)
Other investing activities	(84)		8
Net cash used in investing activities	(2,440)		(157)
Cash flows from financing activities:
Proceeds from (repayments of) commercial paper, net	480		(391)
Repayments of borrowings under our credit commitment and debt obligations	(804)		(1,470)
Payment of debt extinguishment cost	(33)		(36)

Proceeds from issuances of long-term debt, net of issuance costs and utilization of credit commitment	826		1,928

Repurchases of common stock	(410)		(186)
ASR agreement	(475)		—
Dividends paid	(260)		(239)
Proceeds received from employee stock activity and other issuances	17		14
Payments related to employee shares withheld for taxes	(49)		(31)

Other financing activities	7		3
Net cash used in financing activities	(701)		(408)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	(8)		3
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents	(2,450)		255
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	2,782		362
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	332	$	617
Supplemental Disclosure Cash Flow Information
Cash paid for:
Interest	$	79	$	69
Income taxes, net of refund(1)	$	425	$	218

____________

(1) Includes payment of an acquired tax liability in the second quarter of 2021 related to the Verafin acquisition. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

See accompanying notes to condensed consolidated financial statements.

Nasdaq, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION AND NATURE OF OPERATIONS

Nasdaq is a global technology company serving the capital markets and other industries. Our diverse offerings of data, analytics, software and services 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 Technology, Investment Intelligence, Corporate Platforms, and Market Services.

Market Technology

Our Market Technology segment is a leading global technology solutions provider and partner to exchanges, clearing organizations, central securities depositories, regulators, banks, brokers, buy-side firms and corporate businesses. Our solutions are utilized by leading markets in the U.S., Europe and Asia as well as emerging markets in the Middle East, Latin America, and Africa. The Market Technology segment includes our Anti Financial Crime Technology business and our Marketplace Infrastructure Technology business.

Our Anti Financial Crime Technology business includes Nasdaq Trade Surveillance, a technology solution designed for brokers and other market participants to assist them in complying with market rules, regulations and internal market surveillance policies. The Nasdaq Automated Investigator is our cloud-deployed anti-money laundering offering with an automated investigator tool for retail banks. Additionally, in February 2021 we completed the acquisition of Verafin, a SaaS technology provider of anti-financial crime management solutions that offers a cloud-based platform to help detect, investigate, and report money laundering and financial fraud. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

Our Marketplace Infrastructure Technology business powers over 130 market infrastructure operators and new market clients in more than 55 countries and handles a wide array of assets, including but not limited to cash equities, equity derivatives, currencies, various interest-bearing securities, commodities, energy products and digital currencies. Our solutions can also be used in the creation of new asset classes, and non-capital markets customers, including those in insurance liabilities securitization, cryptocurrencies and sports wagering.

Investment Intelligence

Our Investment Intelligence segment includes our Market Data, Index and Analytics businesses.

Our Market Data business sells and distributes real-time and historical market data to the sell-side, the institutional investing community, retail online brokers, proprietary trading shops, other venues, internet portals and data distributors. Our market data products enhance transparency of market activity within our exchanges and provide critical information to professional and non-professional investors globally. Additionally, our Nasdaq Cloud Data Service provided on our Data Link data dissemination platform provides a flexible and efficient method of delivery for real- time exchange data and other financial information.

Our Index business develops and licenses Nasdaq-branded indexes and financial products. We also license cash-settled options, futures and options on futures on our indexes. As of September 30, 2021, 347 ETPs listed in over 30 countries and exchanges tracked a Nasdaq index and accounted for $361 billion in AUM.

Our Analytics business provides asset managers, investment consultants and institutional asset owners with investment insights and workflow solutions. The eVestment platform provides asset owners and allocators with analytics to make data-driven investment decisions, enables asset managers to position institutional products worldwide and provides liquidity solutions for private funds. Together with Solovis, a cloud-based multi-asset portfolio management and risk solution, we provide a suite of cloud-based solutions that help institutional investors and consultants conduct pre-investment due diligence, and monitor their portfolios post-investment.

Corporate Platforms

Our Corporate Platforms segment includes our Listing Services and IR & ESG Services businesses. These businesses deliver critical capital market and ESG solutions across the lifecycle of public and private companies.

Our Listing Services business includes our U.S. and European Listing Services businesses. We operate a variety of listing platforms around the world to provide multiple global capital raising solutions for public companies. Our main listing markets are The Nasdaq Stock Market and the Nasdaq Nordic and Nasdaq Baltic exchanges. Through Nasdaq First North, our Nordic and Baltic operations also offer alternative marketplaces for smaller companies and growth companies. In July 2021 we contributed our NPM business, which was included in our Listing Services business, to a standalone, independent company, of which we own the largest minority interest, together with a consortium of third party financial institutions. The NPM business provides liquidity solutions for private companies to enable employees, investors, and companies to execute transactions.

We continue to grow our U.S. Corporate Bond exchange for the listing of corporate bonds. This exchange operates pursuant to The Nasdaq Stock Market exchange license and is powered by the NFF. As of September 30, 2021, 105 corporate bonds were listed on the Corporate Bond exchange. We also continue to develop the Nasdaq Sustainable Bond Network, a platform for increased transparency in the global sustainable bond markets.

As of September 30, 2021, there were 3,990 total listings on The Nasdaq Stock Market, including 430 ETPs. The combined market capitalization was approximately $25.9 trillion. In Europe, the Nasdaq Nordic and Nasdaq Baltic exchanges, together with Nasdaq First North, were home to 1,172 listed companies with a combined market capitalization of approximately $2.4 trillion.

Our IR & ESG Services business includes our Investor Relations Intelligence and Governance Solutions businesses, which serve both public and private companies and organizations. Our public company clients can be companies listed on our exchanges or other U.S. and global exchanges. Our private company clients include a diverse group of organizations ranging from family owned companies, government organizations, law firms, privately held entities, various non-profit organizations to hospitals and health care systems. We help organizations enhance their ability to understand and expand their global shareholder base, improve corporate governance, and navigate the evolving ESG landscape through our suite of advanced technology, analytics, reporting and consultative services.

Market Services

Our Market Services segment includes our Equity Derivative Trading and Clearing, Cash Equity Trading, FICC and Trade Management Services businesses. We operate multiple exchanges and other marketplace facilities across several asset classes, including derivatives, commodities, cash equity, debt, structured products and ETPs. In addition, in certain countries where we operate exchanges, we also provide broker services, clearing, settlement and central depository services. In January 2020, we commenced an orderly wind-down of our Nordic broker services operations business. We expect this wind-down to continue through the second quarter of 2022. Also, in June 2021, we sold our U.S. Fixed Income business which included an electronic platform for trading of U.S. Treasuries. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

Our transaction-based platforms provide market participants with the ability to access, process, display and integrate orders and quotes. The platforms allow the routing and execution of buy and sell orders as well as the reporting of transactions, providing fee-based revenues.

In the U.S., we operate six options exchanges and three cash equity exchanges. The Nasdaq Stock Market, the largest of our cash equities exchanges, is the largest single venue of liquidity for trading U.S.-listed cash equities. We also operate a Canadian exchange for the trading of certain Canadian-listed securities.

In Europe, we operate exchanges in Stockholm (Sweden), Copenhagen (Denmark), Helsinki (Finland), and Reykjavik (Iceland), as well as the clearing operations of Nasdaq Clearing, as Nasdaq Nordic. We also operate exchanges in Tallinn (Estonia), Riga (Latvia) and Vilnius (Lithuania) as Nasdaq Baltic. Collectively, Nasdaq Nordic and Nasdaq Baltic offer trading in cash equities, depository receipts, warrants, convertibles, rights, fund units and ETFs, as well as trading and clearing of derivatives and clearing of resale and repurchase agreements. Additionally, in June 2021, we completed the acquisition of a majority stake in Puro.earth, a Finnish-based leading marketplace for carbon removal.

The European portion of Nasdaq Fixed Income provides a wide range of products and services, such as trading and clearing, for fixed income products in Sweden, Denmark, Finland, Iceland, Estonia, Lithuania and Latvia.

Nasdaq Commodities is the brand name for Nasdaq’s European commodity-related products and services. Nasdaq Commodities’ offerings include derivatives in power, natural gas and carbon emission markets, seafood, electricity certificates and clearing services. These products are listed on Nasdaq Oslo ASA, except for seafood, which is listed on Fishpool, a third party platform.

Through our Trade Management Services business, we provide market participants with a wide variety of alternatives for connecting to and accessing our markets. Our marketplaces may be accessed via a number of different protocols used for quoting, order entry, trade reporting, and connectivity to various data feeds. We also offer the Nasdaq Workstation, a browser-based, front-end interface that allows market participants to view data and enter orders, quotes and trade reports. In addition, we offer a variety of add-on compliance tools to help firms comply with regulatory requirements.

We provide colocation services to market participants, whereby we offer firms cabinet space and power to house their own equipment and servers within our data centers. Additionally, we offer a number of wireless connectivity offerings between select data centers using millimeter wave and microwave technology.

Our broker services operations business primarily offers technology and customized securities administration solutions to financial participants in the Nordic market. As noted above, we have commenced an orderly wind-down of our Nordic broker services operations business.

2. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include the accounts of Nasdaq, its wholly-owned subsidiaries and other entities in which Nasdaq has a controlling financial interest. When we do not have a controlling interest in an entity, but exercise significant influence over the entity’s operating and financial policies, such investment is accounted for under the equity method of accounting. We recognize our share of earnings or losses of an equity method investee based on our ownership percentage. See “Equity Method Investments,” of Note 6, “Investments,” for further discussion of our equity method investments.

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

As permitted under U.S. GAAP, certain footnotes or other financial information can be condensed or omitted in the interim condensed consolidated financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in Nasdaq’s Form 10-K. The year-end condensed balance sheet data was derived from the audited financial statements, but does not include all disclosures required by U.S. GAAP.

Certain prior year amounts have been reclassified to conform

to the current year presentation.

Accounting Estimates

In preparing our condensed consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on our revenue, operating income and net income, as well as on the value of certain assets and liabilities in our condensed consolidated balance sheets. At least quarterly, we evaluate our assumptions, judgments and estimates, and make changes as deemed necessary.

Nasdaq has considered the impact of COVID-19 on the assumptions and estimates used in evaluating our assets and liabilities, including but not limited to our goodwill, intangible assets, equity method investments, equity securities and allowance for losses on accounts receivable. We determined that there were no material adverse impacts on our financial position and results of operations as of or for the three and nine months ended September 30, 2021 and 2020. In addition, there were no material impairment charges recorded for the three and nine months ended September 30, 2021 and 2020. These estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.

Subsequent Events

There have been no subsequent events through the issuance date of this Quarterly Report on Form 10-Q that would require disclosure in, or adjustment to, the condensed consolidated financial statements.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The following tables summarize the disaggregation of revenue by major product and service and by segment for the three months ended September 30, 2021 and 2020:


	Three Months Ended September 30,
	2021		2020
	(in millions)
Market Technology
Anti Financial Crime Technology	$	66	$	32
Marketplace Infrastructure Technology	48		54
Investment Intelligence
Market data	102		105
Index	119		86
Analytics	51		45
Corporate Platforms
Listing services	99		78
IR & ESG Services	56		53
Market Services
Transaction-based trading and clearing, net	214		181
Trade management services	81		75
Other revenues	2		6
Revenues less transaction-based expenses	$	838	$	715

Substantially all revenues from the Market Technology, Investment Intelligence and Corporate Platforms segments were recognized over time for the three months ended September 30, 2021 and 2020. For the three months ended September 30, 2021, approximately 69.3% of Market Services revenues were recognized at a point in time and 30.7% were recognized over time. For the three months ended September 30, 2020, approximately 67.2% of Market Services revenues were recognized at a point in time and 32.8% were recognized over time.


	Nine Months Ended September 30,
	2021		2020
	(in millions)
Market Technology
Anti Financial Crime Technology	$	175	$	94
Marketplace Infrastructure Technology	157		157
Investment Intelligence
Market data	310		298
Index	328		227
Analytics	149		129
Corporate Platforms
Listing services	282		224
IR & ESG Services	169		158
Market Services
Transaction-based trading and clearing, net	696		589
Trade management services	242		218
Other revenues	26		21
Revenues less transaction-based expenses	$	2,534	$	2,115

Substantially all revenues from the Market Technology, Investment Intelligence and Corporate Platforms segments were recognized over time for the nine months ended September 30, 2021 and 2020. For the nine months ended September 30, 2021, approximately 71.2% of Market Services revenues were recognized at a point in time and 28.8% were recognized over time. For the nine months ended September 30, 2020, approximately 69.8% of Market Services revenues were recognized at a point in time and 30.2% were recognized over time.

Contract Balances

Substantially all of our revenues are considered to be revenues from contracts with customers. The related accounts receivable balances are recorded in our Condensed Consolidated Balance Sheets as receivables, which are net of allowance for doubtful accounts of $18 million as of September 30, 2021 and $21 million as of December 31, 2020. The changes in the balance between periods were immaterial. We do not have obligations for warranties, returns or refunds to customers.

For the majority of our contracts with customers, except for our market technology and listings services contracts, our performance obligations are short-term in nature and there is no significant variable consideration.

We do not have a material amount of revenue recognized from performance obligations that were satisfied in prior periods. We do not provide disclosures about transaction price allocated to unsatisfied performance obligations if contract durations are less than one year. Excluding our market technology contracts, for contract durations that are one-year or greater, materially all of the transaction price allocated to unsatisfied performance obligations is included in deferred revenue. For our market technology contracts, the portion of transaction price allocated to unsatisfied performance obligations is presented in the table below. Deferred revenue primarily represents our contract liabilities related to our fees for Market Technology, Investment Intelligence, annual and initial listings, and IR & ESG Services contracts. Deferred revenue is the only significant contract asset or liability as of September 30, 2021.

See Note 7, “Deferred Revenue,” for our discussion on deferred revenue balances, activity, and expected timing of recognition.

Transaction Price Allocated to Remaining Performance Obligations

As stated above, for contract durations that are one-year or greater, we do not have a material portion of transaction price allocated to unsatisfied performance obligations that are not included in deferred revenue other than for our market technology contracts.

For our market technology contracts, the following table summarizes the amount of the transaction price allocated to performance obligations that are unsatisfied as of September 30, 2021:


	(in millions)
Remainder of 2021	$	95
2022	415
2023	253
2024	131
2025	78
2026+	135
Total	$	1,107

Market technology deferred revenue, as discussed in Note 7, “Deferred Revenue,” represents consideration received that is yet to be recognized as revenue for unsatisfied performance obligations.

4. ACQUISITIONS AND DIVESTITURE

We completed the following divestiture and acquisitions in 2021 and 2020. Financial results of each transaction are included in our condensed consolidated financial statements from the date of each acquisition.

2021 Divestiture

In June 2021, we sold our U.S. Fixed Income business, which was part of our FICC business within our Market Services segment, to Tradeweb Markets Inc., or Tradeweb. We recognized a pre-tax gain on the sale of $84 million, net of disposal costs. The pre-tax gain is included in net gain on divestiture of business in the Condensed Consolidated Statements of Income.

As part of the purchase price consideration related to this business when it was acquired in 2013, we agreed to future annual issuances of 992,247 shares of Nasdaq common stock, which approximated certain tax benefits associated with the transaction. Such contingent future issuances of Nasdaq common stock were to be issued annually through 2027 if Nasdaq’s total gross revenues equaled or exceeded $25 million in each such year. The contingent future issuances of Nasdaq common stock were subject to anti-dilution protections and acceleration upon certain events.

Upon the consummation of the sale of our U.S. Fixed Income business, the aggregate number of Nasdaq shares remaining under the contingent obligation described above were reduced (pursuant to the discounting adjustment provisions set forth in the original purchase agreement for Nasdaq's acquisition of the business) and accelerated, resulting in an issuance of approximately 6.2 million shares of Nasdaq common stock to an assignee of the entity that sold this business to us in 2013.

Nasdaq intends to use the proceeds from the sale, available tax benefits and working and clearing capital of this business, as well as other sources of cash, to repurchase shares of Nasdaq common stock in order to offset the earnings per share dilution from the sale.

To facilitate these repurchases, the board of directors has authorized an increase to the share repurchase program. See “Share Repurchase Program,” of Note 11, “Nasdaq Stockholders' Equity,” for further discussion.

2021 Acquisition

Acquisition of Verafin

In February 2021, we completed the acquisition of Verafin, a SaaS technology provider of anti-financial crime management solutions that provides a cloud-based platform to help detect, investigate, and report money laundering and financial fraud, for an aggregate purchase price of $2.75 billion, subject to certain adjustments. The $2.75 billion purchase price includes a cash payment of $102 million, reflected in cash from operating activities in our Condensed Consolidated Statements of Cash Flows, the release of which is subject to certain employment-related conditions over three years following the closing of the transaction. This payment was recorded as a prepaid expense and is recorded in other current and non-current assets in our Condensed Consolidated Balance Sheets and will be amortized to merger and strategic initiatives expense on a straight-line basis over a three-year period. Verafin is part of our Market Technology segment.

Nasdaq used the net proceeds from our offering of senior notes in December 2020, commercial paper issuances, and cash on hand to fund this acquisition. See “Commercial Paper Program,” and “Senior Unsecured Notes Due 2022, 2031 and 2040,” of Note 8, “Debt Obligations,” for further discussion.

As of September 30, 2021, the allocation of purchase price includes the effect of a $9 million measurement period adjustment recorded during the second quarter. This adjustment resulted in an increase to both total net liabilities acquired and goodwill. Additional adjustments to the provisional values may result before the end of the measurement period, a period not to exceed 12 months from the acquisition date. These adjustments, which may include tax and other estimates will be recorded in the reporting period in which the adjustment amounts are determined. Changes to amounts recorded as assets and liabilities may result in a corresponding adjustment to goodwill.



	(in millions)
Goodwill	$	1,882
Acquired Intangible Assets	815
Total Net Liabilities Acquired	(46)
Purchase Consideration	$	2,651

Intangible Assets

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


	Customer Relationships			Technology			Trade Name			Total Acquired Intangible Assets
Intangible asset value (in millions)	$	532		$	246		$	37		$	815
Discount rate used	7.5		%	7.5		%	7.5		%
Estimated average useful life	22 years			7 years			20 years

Customer Relationships

Customer relationships represent the non-contractual and contractual relationships with customers.

Methodology

Customer relationships were valued using the income approach, specifically an excess earnings method. The excess earnings method examines the economic returns contributed by the identified tangible and intangible assets of a company, and then isolates the excess return that is attributable to the intangible asset being valued.

Discount Rate

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

For our acquisition of Verafin, a discounted tax amortization benefit was added to the fair value of the assets under the assumption that the customer relationships would be amortized for tax purposes over a period of 20 years.

Estimated Useful Life

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

Technology

As part of our acquisition of Verafin, we acquired developed technology.

Methodology

The developed technology was valued using the income approach, specifically the relief-from-royalty method, or RFRM. The RFRM is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. The royalty rate is applied to the projected revenue over the expected remaining life of the intangible asset to estimate royalty savings. The net after-tax royalty savings are calculated for each year in the remaining economic life of the technology and discounted to present value.

Discount Rate

The discount rates used reflect the amount of risk associated with the hypothetical cash flows for the developed technology relative to the overall business as discussed above in “Customer Relationships.”

Estimated Useful Life

We have estimated the useful life of the Verafin technology to be 7 years.

Trade Name

As part of our acquisition of Verafin, we acquired a trade name. The trade name is recognized in the industry and carries a reputation for quality. As such, the reputation and positive recognition embodied in the trade name is a valuable asset to Nasdaq.

Methodology

The Verafin trade name was valued using the income approach, specifically the RFRM as discussed above in “Technology.”

Discount Rate

The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the trade name relative to the overall business as discussed above in “Customer Relationships.”

Estimated Useful Life

We have estimated the useful life of the Verafin trade name to be 20 years and our intention is to continue to use it in the branding of products.

2020 Acquisition

Acquisition of Solovis

In March 2020, we acquired Solovis, a provider of multi-asset class portfolio management, analytics and reporting tools across public and private markets. Solovis is part of our Investment Intelligence segment.

Pro Forma Results and Acquisition-Related Costs

The condensed consolidated financial statements for the three and nine months ended September 30, 2021 and 2020 include the financial results of the above acquisitions from the dates of these acquisitions. Pro forma financial results have not been presented since these acquisitions both individually and in the aggregate were not material to our financial results.

Acquisition-related costs for the transactions described above

were expensed as incurred and are included in merger and strategic initiatives expense in the Condensed Consolidated Statements of Income.

5. GOODWILL AND ACQUIRED INTANGIBLE ASSETS

Goodwill

The following table presents the changes in goodwill by business segment during the nine months ended September 30, 2021:




	(in millions)
Market Technology
Balance at December 31, 2020	$	309
Goodwill acquired	1,873


Other adjustments	(6)
Balance at September 30, 2021	$	2,176
Investment Intelligence
Balance at December 31, 2020	$	2,541


Divestiture of business	(23)
Other adjustments	(61)
Balance at September 30, 2021	$	2,457
Corporate Platforms
Balance at December 31, 2020	$	481



Other adjustments	(11)
Balance at September 30, 2021	$	470
Market Services
Balance at December 31, 2020	$	3,519
Goodwill acquired	15

Divestiture of business	(37)
Other adjustments	(90)
Balance at September 30, 2021	$	3,407

Total
Balance at December 31, 2020	$	6,850
Goodwill acquired	1,888

Divestiture of business	(60)
Other adjustments	(168)
Balance at September 30, 2021	$	8,510

In the preceding table:

Divestiture of business relates to the sale of our U.S. Fixed Income business. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion. In addition to revenues earned through Market Services, our U.S. Fixed Income business also earned fees from market data, which are included in our Investment Intelligence segment. Therefore, a portion of the goodwill was allocated to this segment.
Other adjustments includes foreign currency translation adjustment. For Market Technology, it also includes a measurement period adjustment related to our acquisition of Verafin. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

As of September 30, 2021, the amount of goodwill, primarily relating to our acquisition of Verafin, that is expected to be deductible for tax purposes in future periods is $1.8 billion.

Goodwill represents the excess of purchase price over the value assigned to the net assets, including identifiable intangible assets, of a business acquired. Goodwill is allocated to our reporting units based on the assignment of the fair values of each reporting unit of the acquired company. We test goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying amount may be impaired, such as changes in the business climate, poor indicators of operating performance or the sale or disposition of a significant portion of a reporting unit. There was no impairment of goodwill for the three and nine months ended September 30, 2021 and 2020; however, events such as prolonged economic weakness or unexpected significant declines in operating results of any of our reporting units or businesses, may result in goodwill impairment charges in the future.

Acquired Intangible Assets

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


	September 30, 2021		December 31, 2020

Finite-Lived Intangible Assets	(in millions)
Gross Amount
Technology	$	316	$	76
Customer relationships	2,049		1,599
Trade names and other	60		18
Foreign currency translation adjustment	(131)		(104)
Total gross amount	$	2,294	$	1,589
Accumulated Amortization
Technology	$	(50)	$	(24)
Customer relationships	(683)		(648)
Trade names and other	(10)		(6)
Foreign currency translation adjustment	74		58
Total accumulated amortization	$	(669)	$	(620)
Net Amount
Technology	$	266	$	52
Customer relationships	1,366		951
Trade names and other	50		12
Foreign currency translation adjustment	(57)		(46)
Total definite-lived intangible assets	$	1,625	$	969

Indefinite-Lived Intangible Assets
Exchange and clearing registrations	$	1,257	$	1,257
Trade names	121		121
Licenses	52		52
Foreign currency translation adjustment	(170)		(144)
Total indefinite-lived intangible assets	$	1,260	$	1,286
Total intangible assets	$	2,885	$	2,255

The change in the gross and net amounts for technology, customer relationships and trade names and other finite-lived intangible assets as of September 30, 2021 compared with December 31, 2020 is primarily related to our acquisition of Verafin. The change in the gross and net amounts for customer relationships as of September 30, 2021 compared with December 31, 2020 is also related to the divestiture of our U.S. Fixed Income business. See “2021 Acquisition,” and “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion of these transactions.

The following table presents our amortization expense for acquired finite-lived intangible assets:


	Three Months Ended September 30,
	2021		2020
	(in millions)
Amortization expense	$	40	$	26

	Nine Months Ended September 30,
	2021		2020
	(in millions)
Amortization expense	$	116	$	76

The increase in amortization expense for the three and nine months ended September 30, 2021 compared with the same periods in 2020 was primarily due to additional amortization expense for acquired intangible assets related to our acquisition of Verafin. These amounts are included in depreciation and amortization expense in the Condensed Consolidated Statements of Income.

The table below presents the estimated future amortization expense (excluding the impact of foreign currency translation adjustments of $57 million as of September 30, 2021) of acquired finite-lived intangible assets as of September 30, 2021:


	(in millions)
Remainder of 2021	$	41
2022	162
2023	159
2024	153
2025	151
2026+	1,016
Total	$	1,682

6. INVESTMENTS

The following table presents the details of our investments:


	September 30, 2021		December 31, 2020
	(in millions)
Financial investments	$	185	$	195



Equity method investments	$	401	$	216
Equity securities	$	74	$	60

Financial Investments

As of September 30, 2021, financial investments are comprised of trading securities, primarily highly rated European government debt securities, of which $166 million are assets primarily utilized to meet regulatory capital requirements, mainly for our clearing operations at Nasdaq Clearing. As of December 31, 2020, financial investments are comprised of trading securities, primarily highly rated European government debt securities, of which $175 million are assets primarily utilized to meet regulatory capital requirements, mainly for our clearing operations at Nasdaq Clearing.

Equity Method Investments

We record our estimated pro-rata share of earnings or losses each reporting period and record any dividends as a reduction in the investment balance. As of September 30, 2021 and 2020, our equity method investments primarily included our 40.0% equity interest in OCC.

The carrying amounts of our equity method investments are included in other non-current assets in the Condensed Consolidated Balance Sheets. No material impairments were recorded for the three and nine months end September 30, 2021 and 2020.

Net income recognized from our equity interest in the earnings and losses of these equity method investments, primarily OCC, was $6 million for the three months ended September 30, 2021, $54 million for the three months ended September 30, 2020, $90 million for the nine months ended September 30, 2021 and $97 million for the nine months ended September 30, 2020. For the three and nine months ended September 30, 2021, lower equity interest in the earnings of OCC is primarily driven by a reduction in clearing fee rates that OCC charges its customers, partially offset by increased volumes.

Equity Securities

The carrying amounts of our equity securities are included in other non-current assets in the Condensed Consolidated Balance Sheets. We elected the measurement alternative for primarily all of our equity securities as they do not have a readily determinable fair value. No material adjustments were made to the carrying value of our equity securities for the three and nine months ended September 30, 2021 and 2020. As of September 30, 2021 and December 31, 2020, our equity securities represent various strategic investments made through our corporate venture program as well as investments acquired through various acquisitions.

7. DEFERRED REVENUE

Deferred revenue represents consideration received that is yet to be recognized as revenue. The changes in our deferred revenue during the nine months ended September 30, 2021 are reflected in the following table:


	Balance at December 31, 2020		Additions		Revenue Recognized		Adjustments		Balance at September 30, 2021
	(in millions)
Market Technology	$	53	$	82	$	(45)	$	(2)	$	88
Investment Intelligence	97		71		(64)		—		104
Corporate Platforms:
Initial Listing	91		80		(33)		(2)		136
Annual Listings	2		83		(2)		(1)		82
IR & ESG Services	46		48		(40)		—		54
Other	17		12		(7)		(2)		20
Total	$	306	$	376	$	(191)	$	(7)	$	484

In the table above:

Additions reflect deferred revenue billed in the current period, net of recognition. Market Technology additions include deferred revenue acquired as part of the acquisition of Verafin.
Revenue recognized includes revenue recognized during the current period that was included in the beginning balance.
Adjustments reflect foreign currency translation adjustments.
Other revenue primarily includes deferred revenue from non-U.S. listing of additional shares fees. Listing of additional shares fees are included in our Listing Services business.

As of September 30, 2021, we estimate that our deferred revenue will be recognized in the following years:


Fiscal year ended:	2021		2022		2023		2024		2025		2026+		Total
	(in millions)
Market Technology	$	41	$	46	$	1	$	—	$	—	$	—	$	88
Investment Intelligence	47		57		—		—		—		—		104
Corporate Platforms:
Initial Listings	14		44		30		21		14		13		136
Annual Listings	82		—		—		—		—		—		82
IR & ESG Services	29		25		—		—		—		—		54
Other	5		6		5		3		1		—		20
Total	$	218	$	178	$	36	$	24	$	15	$	13	$	484

In the above table, 2021 represents the remaining three months of 2021.

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

8. DEBT OBLIGATIONS

The following table presents the changes in the carrying amount of our debt obligations during the nine months ended September 30, 2021:


	December 31, 2020		Additions		Payments, Foreign Currency Translation and Accretion		September 30, 2021
	(in millions)
Short-term debt - commercial paper	$	—	$	3,409	$	(2,929)	$	480
Long-term debt - senior unsecured notes:

2024 Notes	498		—		—		498
2023 Notes	730		—		(730)		—
2026 Notes	497		—		1		498
2029 Notes	726		—		(37)		689
2030 Notes	726		—		(37)		689
2050 Notes	485		—		1		486
2022 Notes	597		—		1		598
2031 Notes	643		—		—		643
2040 Notes	643		—		—		643
2033 Notes	—		726		(19)		707

2020 Credit Facility	(4)		100		(100)		(4)
Total long-term debt	5,541		826		(920)		5,447
Total debt obligations	$	5,541	$	4,235	$	(3,849)	$	5,927

Commercial Paper Program

Our U.S. dollar commercial paper program is supported by our 2020 Credit Facility which provides liquidity support for the repayment of commercial paper issued through this program. See “2020 Credit Facility” below for further discussion. The effective interest rate of commercial paper issuances fluctuates as short term interest rates and demand fluctuate. The fluctuation of these rates may impact our interest expense.

In February 2021, we issued $475 million of commercial paper to partially fund the acquisition of Verafin. For further discussion of the acquisition of Verafin, see “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture.”

In July 2021, we issued commercial paper to partially fund our ASR agreement. See “ASR Agreement,” of Note 11, “Nasdaq Stockholders' Equity."

As of September 30, 2021, commercial paper notes in the table above reflect the aggregate principal amount outstanding, less the unamortized discount which is being accreted through interest expense over the life of the applicable notes. The original maturities of these notes range from 13 days to 101 days and the weighted-average maturity is 35 days. The weighted-average effective interest rate is 0.23% per annum.

Senior Unsecured Notes

Our 2022 and 2040 Notes were issued at par. All of our other outstanding senior unsecured notes were issued at a discount. As a result of the discount, the proceeds received from each issuance were less than the aggregate principal amount. As of September 30, 2021, the amounts in the table above reflect the aggregate principal amount, less the unamortized debt discount and the unamortized debt issuance costs which are being accreted through interest expense over the life of the applicable notes. For our Euro denominated notes, the “Payments, Foreign Currency Translation and Accretion” column also includes the impact of foreign currency translation. Our senior unsecured notes are general unsecured obligations which rank equally with all of our existing and future unsubordinated obligations and are not guaranteed by any of our subsidiaries. The senior unsecured notes were issued under indentures that, among other things, limit our ability to consolidate, merge or sell all or substantially all of our assets, create liens, and enter into sale and leaseback transactions. The senior unsecured notes may be redeemed by Nasdaq at any time, subject to a make-whole amount.

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

2024 Notes

In May 2014, Nasdaq issued the 2024 Notes, which pay interest semiannually at a rate of 4.25% per annum until June 1, 2024. Such interest rate may vary with Nasdaq’s debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 6.25%.

Early Extinguishment of 2023 Notes

Nasdaq issued the 2023 Notes in May 2016, which paid interest annually at a rate of 1.75% per annum. In August 2021, we primarily used the net proceeds from the 2033 Notes to repay in full and terminate our 2023 Notes. For further discussion see “2033 Notes” below. In connection with the early extinguishment of the 2023 Notes, we recorded a pre-tax charge of $33 million, which primarily includes a make-whole redemption price premium. This charge is included in general, administrative and other expense in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2021.

2026 Notes

In June 2016, Nasdaq issued the 2026 Notes, which pay interest semi-annually at a rate of 3.85% per annum until June 30, 2026. Such interest rate may vary with Nasdaq’s debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 5.85%.

2029 Notes

In April 2019, Nasdaq issued the 2029 Notes, which pay interest annually at a rate of 1.75% per annum until March 28, 2029. Such interest rate may vary with Nasdaq’s debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 3.75%.

The 2029 Notes have been designated as a hedge of our net investment in certain foreign subsidiaries to mitigate the foreign exchange risk associated with certain investments in these subsidiaries. The decrease in the carrying amount of $37 million noted in the “Payments, Foreign Currency Translation and Accretion” column in the table above primarily reflects the translation of the 2029 Notes into U.S. dollars and is recorded in accumulated other comprehensive loss within stockholders’ equity in the Condensed Consolidated Balance Sheets as of September 30, 2021.

2030 Notes

In February 2020, Nasdaq issued the 2030 Notes. The 2030 Notes pay interest annually in arrears, which began on February 13, 2021.

The 2030 Notes were designated as a hedge of our net investment in certain foreign subsidiaries to mitigate the foreign exchange risk associated with certain investments in these subsidiaries. The decrease in the carrying amount of $37 million noted in the “Payments, Foreign Currency Translation and Accretion” column in the table above primarily reflects the translation of the 2030 Notes into U.S. dollars and is recorded in accumulated other comprehensive loss within stockholders’ equity in the Condensed Consolidated Balance Sheets as of September 30, 2021.

2050 Notes

In April 2020, Nasdaq issued the 2050 Notes. The 2050 Notes pay interest semi-annually in arrears, which began on October 28, 2020. The interest rate of 3.25% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 5.25%.

Senior Unsecured Notes Due 2022, 2031 and 2040

In December 2020, Nasdaq issued the 2022, 2031 and 2040 Notes. The net proceeds were used to partially fund the acquisition of Verafin. For further discussion of the acquisition of Verafin, see “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture.”

2022 Notes

The 2022 Notes pay interest semi-annually in arrears, which began on June 21, 2021. The interest rate of 0.445% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 2.445%.

2031 Notes

The 2031 Notes pay interest semi-annually in arrears, which began on January 15, 2021. The interest rate of 1.650% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 3.65%.

2040 Notes

The 2040 Notes pay interest semi-annually in arrears, which began on June 21, 2021. The interest rate of 2.500% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 4.50%.

2033 Notes

In July 2021, Nasdaq issued €615 million aggregate principal amount of 0.900% senior notes due in 2033, which pay interest annually in arrears, beginning on July 30, 2022. The net proceeds from the 2033 Notes were approximately $726 million after deducting the underwriting discount and expenses of the offering. We primarily used the net proceeds from the 2033 Notes to redeem all of the 2023 Notes. For further discussion of the 2023 Notes, see “Early Extinguishment of 2023 Notes” above.

The 2033 Notes have been designated as a hedge of our net investment in certain foreign subsidiaries to mitigate the foreign exchange risk associated with certain investments in these subsidiaries. The decrease in the carrying amount of $19 million noted in the “Payments, Foreign Currency Translation and Accretion” column in the table above primarily reflects the translation of the 2033 Notes into U.S. dollars and is recorded in accumulated other comprehensive loss within stockholders’ equity in the Condensed Consolidated Balance Sheets as of September 30, 2021.

Credit Facilities

2020 Credit Facility

In December 2020, Nasdaq entered into the 2020 Credit Facility, which replaced a former credit facility and consists of a $1.25 billion five-year revolving credit facility (with sublimits for non-dollar borrowings, swingline borrowings and letters of credit). Nasdaq intends to use funds available under the 2020 Credit Facility for general corporate purposes and to provide liquidity support for the repayment of commercial paper issued through the commercial paper program. Nasdaq is permitted to repay borrowings under our 2020 Credit Facility at any time in whole or in part, without penalty.

As of September 30, 2021, no amounts were outstanding on the 2020 Credit Facility. The $(4) million balance represents unamortized debt issuance costs which are being accreted through interest expense over the life of the credit facility. Of the $1.25 billion that is available for borrowing, $480 million provides liquidity support for the commercial paper program. As such, as of September 30, 2021, the total remaining amount available under the 2020 Credit Facility was $770 million, excluding the amounts that support the commercial paper program. See “Commercial Paper Program” above for further discussion of our commercial paper program.

Under our 2020 Credit Facility, borrowings under the revolving credit facility and swingline borrowings bear interest on the principal amount outstanding at a variable interest rate based on either the LIBOR, the base rate (as defined in the credit agreement), or other applicable rate with respect to non-dollar borrowings, plus an applicable margin that varies with Nasdaq’s debt rating. We are charged commitment fees of 0.125% to 0.350%, depending on our credit rating, whether or not amounts have been borrowed. These commitment fees are included in interest expense and were not material for the three and nine months ended September 30, 2021.

The 2020 Credit Facility contains financial and operating covenants. Financial covenants include a maximum leverage ratio. Operating covenants include, among other things, limitations on Nasdaq’s ability to incur additional indebtedness, grant liens on assets, dispose of assets and make certain restricted payments. The facility also contains customary affirmative covenants, including access to financial statements, notice of defaults and certain other material events, maintenance of properties and insurance, and customary events of default, including cross-defaults to our material indebtedness.

The 2020 Credit Facility includes an option for Nasdaq to increase the available aggregate amount by up to $625 million, subject to the consent of the lenders funding the increase and certain other conditions.

Other Credit Facilities

Certain of our European subsidiaries have several other credit facilities, which are available in multiple currencies, primarily to support our Nasdaq Clearing operations in Europe, as well as to provide a cash pool credit line for one subsidiary. These credit facilities, in aggregate, totaled $218 million as of September 30, 2021 and $232 million as of December 31, 2020 in available liquidity, none of which was utilized. Generally, these facilities each have a one year term. The amounts borrowed under these various credit facilities bear interest on the principal amount outstanding at a variable interest rate based on a base rate (as defined in the applicable credit agreement), plus an applicable margin. We are charged commitment fees (as defined in the applicable credit agreement), whether or not amounts have been borrowed. These commitment fees are included in interest expense and were not material for the three and nine months ended September 30, 2021 and 2020.

These facilities include customary affirmative and negative operating covenants and events of default.

Debt Covenants

As of September 30, 2021, we were in compliance with the covenants of all of our debt obligations.

9. RETIREMENT PLANS

Defined Contribution Savings Plan

We sponsor a 401(k) Plan for U.S. employees. Employees are immediately eligible to make contributions to the plan and are also eligible for an employer contribution match at an amount equal to 100.0% of the first 6.0% of eligible employee contributions. Savings plan expense included in compensation and benefits expense in the Condensed Consolidated Statements of Income was $3 million for the three months ended September 30, 2021, $4 million for the three months ended September 30, 2020 and $11 million for both the nine months ended September 30, 2021 and 2020.

Pension and Supplemental Executive Retirement Plans

We maintain non-contributory, defined-benefit pension plans, non-qualified SERPs for certain senior executives and other post-retirement benefit plans for eligible employees in the U.S. Our pension plans and SERPs are frozen. Future service and salary for all participants do not count toward an accrual of benefits under the pension plans and SERPs. Most employees outside the U.S. are covered by local retirement plans or by applicable social laws. Benefits under social laws are generally expensed in the periods in which the costs are incurred. The total expense for these plans is included in compensation and benefits expense in the Condensed Consolidated Statements of Income and was $7 million for the three months ended September 30, 2021, $6 million for the three months ended September 30, 2020, $20 million for the nine months ended September 30, 2021 and $17 million for the nine months ended September 30, 2020.

10. SHARE-BASED COMPENSATION

We have a share-based compensation program for employees and non-employee directors. Share-based awards granted under this program include restricted stock (consisting of restricted stock units), PSUs and stock options. For accounting purposes, we consider PSUs to be a form of restricted stock.

Summary of Share-Based Compensation Expense

The following table presents the total share-based compensation expense resulting from equity awards and the 15.0% discount for the ESPP for the three and nine months ended September 30, 2021 and 2020, which is included in compensation and benefits expense in the Condensed Consolidated Statements of Income:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Share-based compensation expense before income taxes	$	23	$	24	$	66	$	64
Income tax benefit	(6)		(7)		(18)		(17)
Share-based compensation expense after income taxes	$	17	$	17	$	48	$	47

Common Shares Available Under Our Equity Plan

As of September 30, 2021, we had approximately 9.5 million shares of common stock authorized for future issuance under our Equity Plan.

Restricted Stock

We grant restricted stock to most active employees. The grant date fair value of restricted stock awards is based on the closing stock price at the date of grant less the present value of future cash dividends. Restricted stock awards granted to employees below the manager level generally vest 33.3% on the first anniversary of the grant date, 33.3% on the second anniversary of the grant date, and 33.3% on the third anniversary of the grant date. Restricted stock awards granted to employees at or above the manager level generally vest 33.3% on the second anniversary of the grant date, 33.3% on the third anniversary of the grant date, and 33.3% on the fourth anniversary of the grant date.

Summary of Restricted Stock Activity

The following table summarizes our restricted stock activity for the nine months ended September 30, 2021:


	Restricted Stock
	Number of Awards	Weighted-Average Grant Date Fair Value









Unvested at January 1, 2021	1,639,051	$	84.21
Granted	469,442	147.68
Vested	(477,127)	79.30
Forfeited	(97,951)	100.17
Unvested at September 30, 2021	1,533,415	$	104.15

As of September 30, 2021, $87 million of total unrecognized compensation cost related to restricted stock is expected to be recognized over a weighted-average period of 1.9 years.

PSUs

PSUs are based on performance measures that impact the amount of shares that each recipient will receive upon vesting. Prior to April 1, 2020, we had two performance-based PSU programs for certain officers, a one-year performance-based program and a three-year cumulative performance-based program that focuses on TSR. Effective April 1, 2020, to better align the equity programs for eligible officers, the one-year performance-based program was eliminated and all eligible officers now participate in the three-year cumulative performance-based program. While the performance periods are complete for all PSUs granted under the one-year performance-based program, some shares underlying these PSUs have not vested.

One-Year PSU Program

The grant date fair value of PSUs under the one-year performance-based program was based on the closing stock price at the date of grant less the present value of future cash dividends. Under this program, an eligible employee received a target grant of PSUs, but could have received from 0.0% to 150.0% of the target amount granted, depending on the achievement of performance measures. These awards vest ratably on an annual basis over a three-year period commencing with the end of the one-year performance period. Compensation cost is recognized over the performance period and the three-year vesting period based on the probability that such performance measures will be achieved, taking into account an estimated forfeiture rate.

Three-Year PSU Program

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

Grants of PSUs that were issued in 2018 with a three-year performance period exceeded the applicable performance parameters. As a result, an additional 150,290 units above the original target were granted in the first quarter of 2021 and were fully vested upon issuance.

The following weighted-average assumptions were used to determine the weighted-average fair values of the PSU awards granted under the three-year PSU program for the nine months ended September 30, 2021 and 2020:


	Nine Months Ended September 30,
	2021			2020
Weighted-average risk free interest rate	0.31		%	0.27		%
Expected volatility	30.11		%	27.40		%
Weighted-average grant date share price	$	150.85		$	92.34
Weighted-average fair value at grant date	$	206.17		$	111.50

In the table above:

The risk-free interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant; and
We use historic volatility for PSU awards issued under the three-year PSU program, as implied volatility data could not be obtained for all the companies in the peer groups used for relative performance measurement within the program.

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

Summary of PSU Activity

The following table summarizes our PSU activity for the nine months ended September 30, 2021:


	PSUs
	One-Year Program			Three-Year Program
	Number of Awards	Weighted-Average Grant Date Fair Value		Number of Awards	Weighted-Average Grant Date Fair Value








Unvested at January 1, 2021	169,548	$	83.33	809,989	$	108.12
Granted	—	—		340,718	166.77
Vested	(17,532)	82.45		(392,727)	116.86
Forfeited	(18,829)	83.31		(12,736)	139.59
Unvested at September 30, 2021	133,187	$	83.45	745,244	$	129.80

In the table above, the granted amount includes additional awards granted based on overachievement of performance parameters as well as target awards.

As of September 30, 2021, $1 million of total unrecognized compensation cost related to the one-year PSU program is expected to be recognized over a weighted-average period of 1.1 years. For the three-year PSU program, $45 million of total unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.5 years.

Stock Options

A summary of stock option activity for the nine months ended September 30, 2021 is as follows:


	Number of Stock Options	Weighted-Average Exercise Price









Outstanding at January 1, 2021	293,353	$	63.22

Exercised	(24,409)	25.28
Forfeited	(127)	25.28
Outstanding and exercisable at September 30, 2021	268,817	$	66.68

There were no stock options granted, exercised or forfeited for the three months ended September 30, 2021.

The net cash proceeds from the exercise of 24,409 stock options for the nine months ended September 30, 2021 was $1 million. The net cash proceeds from the exercise of 25,113 stock options for the three months ended September 30, 2020 was $1 million. The net cash proceeds from the exercise of 80,378 stock options for the nine months ended September 30, 2020 was $2 million.

As of September 30, 2021, the aggregate pre-tax intrinsic value of the outstanding and exercisable stock options in the above table was $34 million and represents the difference between our closing stock price on September 30, 2021 of $193.02 and the exercise price, times the number of shares, which would have been received by the option holders had the option holders exercised their stock options on that date. This amount can change based on the fair market value of our common stock. As of September 30, 2021, the weighted-average remaining contractual term of the outstanding and exercisable stock options included in the above table was 5.3 years. As of September 30, 2020, 0.3 million outstanding stock options were exercisable and the weighted-average exercise price was $62.59.

The total pre-tax intrinsic value of stock options exercised was $2 million for the three months ended September 30, 2020, $3 million for the nine months ended September 30, 2021 and $8 million for the nine months ended September 30, 2020.

ESPP

We have an ESPP under which approximately 4.3 million shares of our common stock were available for future issuance as of September 30, 2021. Under our ESPP, employees may purchase shares having a value not exceeding 10.0% of their annual compensation, subject to applicable annual Internal Revenue Service limitations. We record compensation expense related to the 15.0% discount that is given to our employees, which totaled $1 million for both the three months ended September 30, 2021 and 2020, $6 million for the nine months ended September 30, 2021 and $4 million for the nine months ended September 30, 2020.

11. NASDAQ STOCKHOLDERS' EQUITY

Common Stock

As of September 30, 2021, 300,000,000 shares of our common stock were authorized, 173,886,216 shares were issued and 167,206,649 shares were outstanding. As of December 31, 2020, 300,000,000 shares of our common stock were authorized, 171,278,761 shares were issued and 164,933,678 shares were outstanding. The holders of common stock are entitled to one vote per share, except that our certificate of incorporation limits the ability of any shareholder to vote in excess of 5.0% of the then-outstanding shares of Nasdaq common stock.

Common Stock in Treasury, at Cost

We account for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Nasdaq stockholders’ equity and included in common stock in treasury, at cost in the Condensed Consolidated Balance Sheets. Shares repurchased under our share repurchase program are currently retired and canceled and are therefore not included in the common stock in treasury balance. If treasury shares are reissued, they are recorded at the average cost of the treasury shares acquired. We held 6,679,567 shares of common stock in treasury as of September 30, 2021 and 6,345,083 shares as of December 31, 2020, most of which are related to shares of our common stock withheld for the settlement of employee tax withholding obligations arising from the vesting of restricted stock and PSUs.

Share Repurchase Program

As discussed in “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” on June 16, 2021, our board of directors authorized an increase to our share repurchase program to an aggregate authorized amount of $1.5 billion. As of September 30, 2021, the remaining aggregate authorized amount under the existing share repurchase program was $984 million.

These purchases may be made from time to time at prevailing market prices in open market purchases, privately-negotiated transactions, block purchase techniques, an accelerated share repurchase program or otherwise, as determined by our management. The purchases are primarily funded from existing cash balances. The share repurchase program may be suspended, modified or discontinued at any time, and has no defined expiration date.

The following is a summary of our share repurchase activity, excluding the repurchases done through our ASR agreement described below, reported based on settlement date, for the nine months ended September 30, 2021:


	Nine Months Ended September 30, 2021

Number of shares of common stock repurchased	2,623,551
Average price paid per share	$	156.11
Total purchase price (in millions)	$	410

In the table above, the number of shares of common stock repurchased excludes an aggregate of 334,484 shares withheld upon the vesting of restricted stock and PSUs for the nine months ended September 30, 2021.

As discussed above in “Common Stock in Treasury, at Cost,” shares repurchased under our share repurchase program are currently retired and cancelled.

ASR Agreement

In July 2021 we entered into an ASR agreement to repurchase $475 million of common stock and received an initial delivery of 2,039,940 shares of common stock. The ASR agreement was entered into pursuant to our $1.5 billion share repurchase authorization as discussed in "Share Repurchase Program," above. We expect to receive the remaining shares in the fourth quarter of 2021.

Preferred Stock

Our certificate of incorporation authorizes the issuance of 30,000,000 shares of preferred stock, par value $0.01 per share, issuable from time to time in one or more series. As of September 30, 2021 and December 31, 2020, no shares of preferred stock were issued or outstanding.

Cash Dividends on Common Stock

During the first nine months of 2021, our board of directors declared and paid the following cash dividends:


Declaration Date	Dividend Per Common Share		Record Date	Total Amount Paid		Payment Date
				(in millions)
January 27, 2021	$	0.49	March 12, 2021	$	81	March 26, 2021
April 21, 2021	0.54		June 11, 2021	89		June 25, 2021
July 21, 2021	0.54		September 10, 2021	90		September 24, 2021

				$	260

The total amount paid of $260 million was recorded in retained earnings in the Condensed Consolidated Balance Sheets at September 30, 2021.

In October 2021, the board of directors approved a regular quarterly cash dividend of $0.54 per share on our outstanding common stock. The dividend is payable on December 17, 2021 to shareholders of record at the close of business on December 3, 2021. The estimated amount of this dividend is $90 million. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the board of directors.

The board of directors maintains a dividend policy with the intention to provide stockholders with regular and increasing dividends as earnings and cash flows increase.

12. EARNINGS PER SHARE

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


	Three Months Ended September 30,
	2021		2020
Numerator:	(in millions, except share and per share amounts)
Net income attributable to common shareholders	$	288	$	264
Denominator:
Weighted-average common shares outstanding for basic earnings per share	167,692,369		164,171,067
Weighted-average effect of dilutive securities:
Employee equity awards	2,487,642		2,328,540
Contingent issuance of common stock	—		992,247
Weighted-average common shares outstanding for diluted earnings per share	170,180,011		167,491,854
Basic and diluted earnings per share:
Basic earnings per share	$	1.72	$	1.61
Diluted earnings per share	$	1.69	$	1.58
















	Nine Months Ended September 30,
	2021		2020
Numerator:	(in millions, except share and per share amounts)
Net income attributable to common shareholders	$	928	$	708
Denominator:
Weighted-average common shares outstanding for basic earnings per share	165,506,859		164,377,053
Weighted-average effect of dilutive securities:
Employee equity awards	2,407,484		2,071,848
Contingent issuance of common stock	—		330,749
Weighted-average common shares outstanding for diluted earnings per share	167,914,343		166,779,650
Basic and diluted earnings per share:
Basic earnings per share	$	5.61	$	4.31
Diluted earnings per share	$	5.53	$	4.25

In the preceding tables:

Employee equity awards from our PSU program, which are considered contingently issuable, are included in the computation of dilutive earnings per share on a weighted average basis when management determines that the applicable performance criteria would have been met if the performance period ended as of the date of the relevant computation.
For the three and nine months ended September 30, 2020, the contingent issuance of common stock was related to a contingent obligation associated with a business we sold in June 2021. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

Securities that were not included in the computation of diluted earnings per share because their effect was antidilutive were immaterial for the three months ended September 30, 2021 and for both the nine months ended September 30, 2021 and 2020. There were no securities excluded for the three months ended September 30, 2020.

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables present our financial assets and financial liabilities that were measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020.


	September 30, 2021
	Total		Level 1		Level 2		Level 3
	(in millions)

European government debt securities	$	147	$	147	$	—	$	—
Corporate debt securities	6		—		6		—
State owned enterprises and municipal securities	11		—		11		—
Swedish mortgage bonds	21		—		21		—

Total assets at fair value	$	185	$	147	$	38	$	—

	December 31, 2020
	Total		Level 1		Level 2		Level 3
	(in millions)
European government debt securities	$	156	$	156	$	—	$	—
Corporate debt securities	2		—		2		—
State owned enterprises and municipal securities	15		—		15		—
Swedish mortgage bonds	22		—		22		—

Total assets at fair value	$	195	$	156	$	39	$	—

Financial Instruments Not Measured at Fair Value on a Recurring Basis

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

Our investment in OCC is accounted for under the equity method of accounting. We have elected the measurement alternative for the majority of our equity securities, which primarily represent various strategic investments made through our corporate venture program. See “Equity Method Investments,” and “Equity Securities,” of Note 6, “Investments,” for further discussion.

We also consider our debt obligations to be financial instruments. As of September 30, 2021, the majority of our debt obligations were fixed-rate obligations. We are exposed to changes in interest rates as a result of borrowings under our 2020 Credit Facility, as the interest rates on this facility have a variable rate depending on the maturity of the borrowing and the implied underlying reference rate. As of September 30, 2021, we had no outstanding borrowings under our 2020 Credit Facility. We are also exposed to changes in interest rates as a result of the amounts outstanding from the sale of commercial paper under our commercial paper program. The fair value of our debt obligations utilizing discounted cash flow analyses for our floating rate debt and prevailing market rates for our fixed rate debt was $6.1 billion as of September 30, 2021 and the fair value of our debt obligations utilizing prevailing market rates for our fixed rate debt was $5.9 billion as of December 31, 2020. The discounted cash flow analyses are based on borrowing rates currently available to us for debt with similar terms and maturities. The fair value of our commercial paper as of September 30, 2021 approximated the carrying value since the rates of interest on this short-term debt approximated market rates. Our commercial paper and our fixed rate and floating rate debt are categorized as Level 2 in the fair value hierarchy.

For further discussion of our debt obligations, see Note 8, “Debt Obligations.”

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

Our non-financial assets, which include goodwill, intangible assets, and other long-lived assets, are not required to be carried at fair value on a recurring basis. Fair value measures of non-financial assets are primarily used in the impairment analysis of these assets. Any resulting asset impairment would require that the non-financial asset be recorded at its fair value. Nasdaq uses Level 3 inputs to measure the fair value of the above assets on a non-recurring basis. As of September 30, 2021 and December 31, 2020, there were no non-financial assets measured at fair value on a non-recurring basis.

14. CLEARING OPERATIONS

Nasdaq Clearing

Nasdaq Clearing is authorized and supervised under EMIR as a multi-asset clearinghouse by the SFSA. Such authorization is effective for all member states of the European Union and certain other non-member states that are part of the European Economic Area, including Norway. The clearinghouse acts as the CCP for exchange and OTC trades in equity derivatives, fixed income derivatives, resale and repurchase contracts, power derivatives, emission allowance derivatives, and seafood derivatives.

Through our clearing operations in the financial markets, which include the resale and repurchase market, the commodities markets, and the seafood market, Nasdaq Clearing is the legal counterparty for, and guarantees the fulfillment of, each contract cleared. These contracts are not used by Nasdaq Clearing for the purpose of trading on its own behalf. As the legal counterparty of each transaction, Nasdaq Clearing bears the counterparty risk between the purchaser and seller in the contract. In its guarantor role, Nasdaq Clearing has precisely equal and offsetting claims to and from clearing members on opposite sides of each contract, standing as the CCP on every contract cleared. In accordance with the rules and regulations of Nasdaq Clearing, default fund and margin collateral requirements are calculated for each clearing member’s positions in accounts with the CCP. See “Default Fund Contributions and Margin Deposits” below for further discussion of Nasdaq Clearing’s default fund and margin requirements.

Nasdaq Clearing maintains three member sponsored default funds: one related to financial markets, one related to commodities markets and one related to the seafood market. Under this structure, Nasdaq Clearing and its clearing members must contribute to the total regulatory capital related to the clearing operations of Nasdaq Clearing. This structure applies an initial separation of default fund contributions for the financial, commodities and seafood markets in order to create a buffer for each market’s counterparty risks. As of September 1, 2021, the mutualized default fund has been eliminated and the default fund structure is fully segregated. See “Default Fund Contributions” below for further discussion of Nasdaq

Clearing’s default fund. A power of assessment and a liability waterfall have also been implemented to further align risk between Nasdaq Clearing and its clearing members. See “Power of Assessment” and “Liability Waterfall” below for further discussion.

Nasdaq Commodities Clearing Default

In September 2018, a member of the Nasdaq Clearing commodities market defaulted due to the inability to post sufficient collateral to cover increased margin requirements for the positions of the relevant member, which had experienced losses due to sharp adverse movements in the Nordic - German power market spread. Nasdaq Clearing followed default procedures and offset the future market risk on the defaulting member’s positions.

Immediately following the event, Nasdaq Clearing launched a comprehensive enhancement program to strengthen the resilience and robustness of the clearinghouse.

In December 2018, we initiated a capital relief program. The capital relief program was a voluntary program open to each commodities default fund participant; each such participant who agreed to the capital relief program received a proportion of the funds made available under the capital relief program as reflected by their proportionate share of the aggregate of the clearing members' default fund replenishments.

Since the member default in 2018, Nasdaq Clearing has been working to maximize the recovery from the defaulted member. All funds recovered are applied towards the default fund participants on a pro rata basis. As of September 30, 2021, the expected recovery together with the capital relief program amounts to approximately 80% of the initial loss, of which the majority has been paid and the remainder is expected to be paid during 2021.

In December 2018, the SFSA initiated a review of Nasdaq Clearing. In January 2021, the SFSA issued a warning combined with an administrative fine of approximately $34 million (SEK 300 million) to Nasdaq Clearing based on their review. Nasdaq Clearing has assessed the SFSA´s decision and has appealed the decision to the Administrative Court. As of September 30, 2021, no accrual has been recorded related to this matter as the outcome cannot be reasonably estimated.

Default Fund Contributions and Margin Deposits

As of September 30, 2021, clearing member default fund contributions and margin deposits were as follows:


	September 30, 2021
	Cash Contributions		Non-Cash Contributions		Total Contributions
	(in millions)
Default fund contributions	$	614	$	207	$	821
Margin deposits	3,588		7,327		10,915
Total	$	4,202	$	7,534	$	11,736

Of the total default fund contributions of $821 million, Nasdaq Clearing can utilize $739 million as capital resources in the event of a counterparty default. The remaining balance of $82 million pertains to member posted surplus balances.

Our clearinghouse holds material amounts of clearing member cash deposits which are held or invested primarily to provide security of capital while minimizing credit, market and liquidity risks. While we seek to achieve a reasonable rate of return, we are primarily concerned with preservation of capital and managing the risks associated with these deposits.

Clearing member cash contributions are maintained in demand deposits held at central banks and large, highly rated financial institutions or secured through direct investments, primarily central bank certificates and highly rated European government debt securities with original maturities primarily 1 year or less, reverse repurchase agreements and multilateral development bank debt securities. Investments in reverse repurchase agreements range in maturity from 1 day to 13 days and are secured with highly rated government securities. The carrying value of these securities approximates their fair value due to the short-term nature of the instruments and reverse repurchase agreements.

Nasdaq Clearing has invested the total cash contributions of $4,202 million as of September 30, 2021 and $3,942 million as of December 31, 2020, in accordance with its investment policy as follows:


	September 30, 2021		December 31, 2020
	(in millions)
Demand deposits	$	2,731	$	2,086
Central bank certificates	685		1,111
European government debt securities	353		470
Reverse repurchase agreements	188		180

Multilateral development bank debt securities	245		95
Total	$	4,202	$	3,942

In the investment activity related to default fund and margin contributions, we are exposed to counterparty risk related to reverse repurchase agreement transactions, which reflect the risk that the counterparty might become insolvent and, thus, fail to meet its obligations to Nasdaq Clearing. We mitigate this risk by only engaging in transactions with high credit quality reverse repurchase agreement counterparties and by limiting the acceptable collateral under the reverse repurchase agreement to high quality issuers, primarily government securities and other securities explicitly guaranteed by a government. The value of the underlying security is monitored during the lifetime of the contract, and in the event the market value of the underlying security falls below the reverse repurchase amount, our clearinghouse may require additional collateral or a reset of the contract.

Default Fund Contributions

Required contributions to the default funds are proportional to the exposures of each clearing member. When a clearing member is active in more than one market, contributions must be made to all markets’ default funds in which the member is active. Clearing members’ eligible contributions may include cash and non-cash contributions. Cash contributions received are maintained in demand deposits held at central banks and large, highly rated financial institutions or invested by Nasdaq Clearing, in accordance with its investment policy, either in central bank certificates, highly rated government debt securities, reverse repurchase agreements with highly rated government debt securities as collateral, or multilateral development bank debt securities. Nasdaq Clearing maintains and manages all cash deposits related to margin collateral. All risks and rewards of collateral ownership, including interest, belong to Nasdaq Clearing. Clearing members’ cash contributions are included in default funds and margin deposits in the Condensed Consolidated Balance Sheets as both a current asset and a current liability. Non-cash contributions include highly rated government debt securities that must meet specific criteria approved by Nasdaq Clearing. Non-cash contributions are pledged assets that are not recorded in the Condensed Consolidated Balance Sheets as Nasdaq Clearing does not take legal ownership of these assets and the risks and rewards remain with the clearing members. These balances may fluctuate over time due to changes in the amount of deposits required and whether members choose to provide cash or non-cash contributions. Assets pledged are held at a nominee account in Nasdaq Clearing’s name for the benefit of the clearing members and are immediately accessible by Nasdaq Clearing in the event of a default. In addition to clearing members’ required contributions to the liability waterfall, Nasdaq Clearing is also required to contribute capital to the liability waterfall and overall regulatory capital as specified under its clearinghouse rules. As of September 30, 2021, Nasdaq Clearing committed capital totaling $137 million to the liability waterfall and overall regulatory capital, in the form of government debt securities, which are recorded as financial investments in the Condensed Consolidated Balance Sheets. The combined regulatory capital of the clearing members and Nasdaq Clearing is intended to secure the obligations of a clearing member exceeding such member’s own margin and default fund deposits and may be used to cover losses sustained by a clearing member in the event of a default.

Margin Deposits

Nasdaq Clearing requires all clearing members to provide collateral, which may consist of cash and non-cash contributions, to guarantee performance on the clearing members’ open positions, or initial margin. In addition, clearing members must also provide collateral to cover the daily margin call if needed. See “Default Fund Contributions” above for further discussion of cash and non-cash contributions.

Similar to default fund contributions, Nasdaq Clearing maintains and manages all cash deposits related to margin collateral. All risks and rewards of collateral ownership, including interest, belong to Nasdaq Clearing and are recorded in revenues. These cash deposits are recorded in default funds and margin deposits in the Condensed Consolidated Balance Sheets as both a current asset and a current liability. Pledged margin collateral is not recorded in our Condensed Consolidated Balance Sheets as all risks and rewards of collateral ownership, including interest, belong to the counterparty. Assets pledged are held at a nominee account in Nasdaq Clearing’s name for the benefit of the clearing members and are immediately accessible by Nasdaq Clearing in the event of a default.

Nasdaq Clearing marks to market all outstanding contracts and requires payment from clearing members whose positions have lost value. The mark-to-market process helps identify any clearing members that may not be able to satisfy their financial obligations in a timely manner allowing Nasdaq Clearing the ability to mitigate the risk of a clearing member defaulting due to exceptionally large losses. In the event of a default, Nasdaq Clearing can access the defaulting member’s margin and default fund deposits to cover the defaulting member’s losses.

Regulatory Capital and Risk Management Calculations

Nasdaq Clearing manages risk through a comprehensive counterparty risk management framework, which is comprised of policies, procedures, standards and financial resources. The level of regulatory capital is determined in accordance with Nasdaq Clearing’s regulatory capital and default fund policy, as approved by the SFSA. Regulatory capital calculations are continuously updated through a proprietary capital-at-risk calculation model that establishes the appropriate level of capital.

As mentioned above, Nasdaq Clearing is the legal counterparty for each contract cleared and thereby guarantees the fulfillment of each contract. Nasdaq Clearing accounts for this guarantee as a performance guarantee. We determine the fair value of the performance guarantee by considering daily settlement of contracts and other margining and default fund requirements, the risk management program, historical evidence of default payments, and the estimated probability of potential default payouts. The calculation is determined using proprietary risk management software that simulates gains and losses based on historical market prices, extreme but plausible market scenarios, volatility and other factors present at that point in time for those particular unsettled contracts. Based on this analysis, excluding any liability related to the Nasdaq commodities clearing default (see discussion above), the estimated liability was nominal and no liability was recorded as of September 30, 2021.

Power of Assessment

To further strengthen the contingent financial resources of the clearinghouse, Nasdaq Clearing has power of assessment that provides the ability to collect additional funds from its clearing members to cover a defaulting member’s remaining obligations up to the limits established under the terms of the clearinghouse rules. The power of assessment corresponds to 230.0% of the clearing member’s aggregate contribution to the financial, commodities and seafood markets’ default funds.

Liability Waterfall

The liability waterfall is the priority order in which the capital resources would be utilized in the event of a default where the defaulting clearing member’s collateral would not be sufficient to cover the cost to settle its portfolio. If a default occurs and the defaulting clearing member’s collateral, including cash deposits and pledged assets, is depleted, then capital is utilized in the following amount and order:

junior capital contributed by Nasdaq Clearing, which totaled $44 million as of September 30, 2021;
a loss-sharing pool related only to the financial market that is contributed to by clearing members and only applies if the defaulting member’s portfolio includes interest rate swap products;
specific market default fund where the loss occurred (i.e., the financial, commodities, or seafood market), which includes capital contributions of the clearing members on a pro-rata basis; and
fully segregated senior capital for each specific market contributed by Nasdaq Clearing, calculated in accordance with clearinghouse rules, which totaled $24 million as of September 30, 2021.

If additional funds are needed after utilization of the liability waterfall, or if part of the waterfall has been utilized and needs to be replenished, then Nasdaq Clearing will utilize its power of assessment and additional capital contributions will be required by non-defaulting members up to the limits established under the terms of the clearinghouse rules.

In addition to the capital held to withstand counterparty defaults described above, Nasdaq Clearing also has committed capital of $69 million to ensure that it can handle an orderly wind-down of its operation, and that it is adequately protected against investment, operational, legal, and business risks.

Market Value of Derivative Contracts Outstanding

The following table presents the market value of derivative contracts outstanding prior to netting:


	September 30, 2021
	(in millions)
Commodity and seafood options, futures and forwards	$	217
Fixed-income options and futures	291
Stock options and futures	223
Index options and futures	100
Total	$	831

In the table above:

We determined the fair value of our option contracts using standard valuation models that were based on market-based observable inputs including implied volatility, interest rates and the spot price of the underlying instrument.
We determined the fair value of our futures contracts based upon quoted market prices and average quoted market yields.
We determined the fair value of our forward contracts using standard valuation models that were based on market-based observable inputs including benchmark rates and the spot price of the underlying instrument.

Derivative Contracts Cleared

The following table presents the total number of derivative contracts cleared through Nasdaq Clearing for the nine months ended September 30, 2021 and 2020:


	September 30, 2021	September 30, 2020
Commodity and seafood options, futures and forwards	432,188	476,480
Fixed-income options and futures	17,010,664	16,456,583
Stock options and futures	15,217,832	14,322,903
Index options and futures	27,311,122	41,202,460
Total	59,971,806	72,458,426

In the table above, the total volume in cleared power related to commodity contracts was 632 Terawatt hours (TWh) for the nine months ended September 30, 2021 and 670 TWh for the nine months ended September 30, 2020.

Resale and Repurchase Agreements Contracts Outstanding and Cleared

The outstanding contract value of resale and repurchase agreements was $3.1 billion as of September 30, 2021 and $2.4 billion as of September 30, 2020. The total number of resale and repurchase agreements contracts cleared was 4,494,952 for the nine months ended September 30, 2021 and was 3,639,384 for the nine months ended September 30, 2020.

15. LEASES

We have operating leases which are primarily real estate leases predominantly for our U.S. and European headquarters and for general office space. The following table provides supplemental balance sheet information related to Nasdaq's operating leases:


Leases	Balance Sheet Classification	September 30, 2021		December 31, 2020
		(in millions)
Assets:
Operating lease assets	Operating lease assets	$	383	$	381

Liabilities:
Current lease liabilities	Other current liabilities	$	42	$	46
Non-current lease liabilities	Operating lease liabilities	398		389
Total lease liabilities		$	440	$	435

The following table summarizes Nasdaq's lease cost:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Operating lease cost	$	21	$	22	$	63	$	63
Variable lease cost	7		8		21		20
Sublease income	(1)		(1)		(3)		(3)
Total lease cost	$	27	$	29	$	81	$	80

In the table above, operating lease costs include short-term lease cost, which was immaterial.

The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded in our Condensed Consolidated Balance Sheets.


	September 30, 2021
	(in millions)
Remainder of 2021	$	10
2022	62
2023	57
2024	52
2025	39
2026+	330
Total lease payments	550
Less: interest	(110)
Present value of lease liabilities	$	440

In the table above, interest is calculated using the interest rate for each lease. Present value of lease liabilities include the current portion of $42 million.

The following table provides information related to Nasdaq's lease term and discount rate:


	September 30, 2021
Weighted-average remaining lease term (in years)	11.4

Weighted-average discount rate	3.8	%

The following table provides supplemental cash flow information related to Nasdaq's operating leases:


	Nine Months End September 30,
	2021		2020
	(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities	$	57	$	57

Lease assets obtained in exchange for new operating lease liabilities	$	47	$	94

16. INCOME TAXES

Income Tax Provision

The following table presents our income tax provision and effective tax rate:


	Three Months Ended September 30,
	2021			2020
	(in millions)
Income tax provision	$	83		$	93
Effective tax rate	22.4		%	26.1		%

	Nine Months Ended September 30,
	2021			2020
	(in millions)
Income tax provision	$	292		$	237
Effective tax rate	23.9		%	25.1		%

The lower effective tax rate for the three and nine months ended September 30, 2021 was primarily due to return-to-provision adjustments and prior period tax benefits. The lower effective tax rate for the nine months ended September 30, 2021 was also due to higher tax benefit from vested share-based awards in the U.S.

The effective tax rate may vary from period to period depending on, among other factors, the geographic and business mix of earnings and losses. These same and other factors, including history of pre-tax earnings and losses, are taken into account in assessing the ability to realize deferred tax assets.

Tax Audits

Nasdaq and its eligible subsidiaries file a consolidated U.S. federal income tax return, applicable state and local income tax returns and non-U.S. income tax returns. We are subject to examination by federal, state and local, and foreign tax authorities. Federal income tax returns for the years 2012 through 2016 are currently under examination by the Internal Revenue Service and we are subject to examination by the Internal Revenue Service for 2017 through 2019. Several

state tax returns are currently under examination by the respective tax authorities for the years 2012 through 2018, while 2019 is subject to examination. Non-U.S. tax returns are subject to examination by the respective tax authorities for the years 2015 through 2020.

We regularly assess the likelihood of additional assessments by each jurisdiction and have established tax reserves that we believe are adequate in relation to the potential for additional assessments. Examination outcomes and the timing of examination settlements are subject to uncertainty. Although the results of such examinations may have an impact on our unrecognized tax benefits, we do not anticipate that such impact will be material to our condensed consolidated financial position or results of operations, but may be material to our operating results for a particular period and the effective tax rate for that period. We do not expect the settlement of any tax audits to be material in the next twelve months.

17. COMMITMENTS, CONTINGENCIES AND GUARANTEES

Guarantees Issued and Credit Facilities Available

In addition to the default fund contributions and margin collateral pledged by clearing members discussed in Note 14, “Clearing Operations,” we have obtained financial guarantees and credit facilities, which are guaranteed by us through counter indemnities, to provide further liquidity related to our clearing businesses. Financial guarantees issued to us totaled $5 million as of September 30, 2021 and December 31, 2020. As discussed in “Other Credit Facilities,” of Note 8, “Debt Obligations,” we also have credit facilities primarily related to our Nasdaq Clearing operations, which are available in multiple currencies, and totaled $218 million as of September 30, 2021 and $232 million as of December 31, 2020 in available liquidity, none of which was utilized.

Other Guarantees

Through our clearing operations in the financial markets, Nasdaq Clearing is the legal counterparty for, and guarantees the performance of, its clearing members. See Note 14, “Clearing Operations,” for further discussion of Nasdaq Clearing performance guarantees.

We have provided a guarantee related to lease obligations for The Nasdaq Entrepreneurial Center, Inc., which is a not-for-profit organization designed to convene, connect and engage aspiring and current entrepreneurs. This entity is not included in the condensed consolidated financial statements of Nasdaq.

We believe that the potential for us to be required to make payments under these arrangements is unlikely. Accordingly, no contingent liability is recorded in the Condensed Consolidated Balance Sheets for the above guarantees.

Routing Brokerage Activities

One of our broker-dealer subsidiaries, Nasdaq Execution Services, provides a guarantee to securities clearinghouses and exchanges under its standard membership agreements, which require members to guarantee the performance of other members. If a member becomes unable to satisfy its obligations to a clearinghouse or exchange, other members would be required to meet its shortfalls. To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral, as well as meet certain minimum financial standards. Nasdaq Execution Services’ maximum potential liability under these arrangements cannot be quantified. However, we believe that the potential for Nasdaq Execution Services to be required to make payments under these arrangements is unlikely. Accordingly, no contingent liability is recorded in the Condensed Consolidated Balance Sheets for these arrangements.

Legal and Regulatory Matters

Litigation

As previously disclosed, we are named as one of many defendants in City of Providence v. BATS Global Markets, Inc., et al., 14 Civ. 2811 (S.D.N.Y.), which was filed on April 18, 2014 in the United States District Court for the Southern District of New York. The district court appointed lead counsel, who filed an amended complaint on September 2, 2014. The amended complaint names as defendants seven national exchanges, as well as Barclays PLC, which operated a private alternative trading system. On behalf of a putative class of securities traders, the plaintiffs allege that the defendants engaged in a scheme to manipulate the markets through high-frequency trading; the amended complaint asserts claims against us under Section 10(b) of the Exchange Act and Rule 10b-5, as well as under Section 6(b) of the Exchange Act. The plaintiffs seek injunctive and monetary relief of an unspecified amount. We filed a motion to dismiss the amended complaint on November 3, 2014. In response, the plaintiffs filed a second amended complaint on November 24, 2014, which names the same defendants and alleges essentially the same violations. We then filed a motion to dismiss the second amended complaint on January 23, 2015. On August 26, 2015, the district court entered an order dismissing the second amended complaint in its entirety. The plaintiffs appealed the judgment of dismissal to the United States Court of Appeals for the Second Circuit (although opting not to appeal the dismissal with respect to Barclays PLC or the dismissal of claims under Section 6(b) of the Exchange Act). On December 19, 2017, the Second Circuit issued an opinion vacating the district court’s judgment of dismissal and remanding to the district court for further proceedings. On May 18, 2018, the exchanges filed a motion to dismiss the amended complaint, raising issues not addressed in the proceedings to date. On May 28, 2019, the district court denied the exchanges’ renewed motion to dismiss, leading the parties to commence the discovery process. Discovery, focused on issues of whether the case can be certified as a class action and whether the plaintiffs’

claims are precluded by federal securities regulation, ended on April 26, 2021, and potentially dispositive motions regarding these issues were filed on May 28, 2021. Given the preliminary nature of the proceedings, we are unable to estimate what, if any, liability may result from this litigation. However, we believe that the claims are without merit and will continue to litigate vigorously.

Armenian Stock Exchange Investigation

As disclosed in our prior filings with the SEC, a former non-U.S. subsidiary of Nasdaq, NASDAQ OMX Armenia OJSC, operated the Armenian Stock Exchange and the Central Depository of Armenia, which are regulated by the Central Bank of Armenia under Armenian law. In accordance with the requirements of Armenian law, Mellat Bank SB CJSC, an Armenian entity that is designated under Executive Order 13382, was a market participant on the Armenian Stock Exchange and, as a result, paid participation and transaction fees to the Armenian Stock Exchange during the period from 2012-2014. In 2014, we voluntarily self-disclosed this matter to the U.S. Department of Treasury’s Office of Foreign Assets Control, or OFAC, and received authorization from OFAC to continue, if necessary, certain activities pertaining to Mellat Bank SB CJSC in Armenia in a limited manner. In 2015, Nasdaq sold a majority of its ownership of Nasdaq OMX Armenia OJSC, with the remaining minority interest sold in 2018.

OFAC has been conducting an inquiry into the Armenian Stock Exchange matter described above and in our prior filings since 2016, and during the first quarter of 2021, we were advised that OFAC is considering a civil monetary penalty in connection with that matter. We are currently in discussions with OFAC.

While we believe our decision to voluntarily self-report this issue and our continued cooperation with OFAC, along with the permit we received from OFAC in connection with our transactions involving the Armenian Stock Exchange, will be mitigating factors with respect to the matter, any monetary fines or restrictions may nonetheless be material to our financial results in the period in which they are imposed. We cannot currently predict when our discussions with OFAC will conclude or the amount of any potential penalties imposed. Accordingly, we are unable to reasonably estimate any potential loss or range of loss and we have not accrued for a loss contingency.

Nasdaq Commodities Clearing Default

During September 2018, a clearing member of Nasdaq Clearing's commodities market was declared in default. In December 2018, the SFSA initiated a review of Nasdaq Clearing. We have been cooperating fully with the SFSA in their review. In January 2021, the SFSA issued a warning combined with an administrative fine of approximately $34 million (SEK 300 million) to Nasdaq Clearing relating to its review. Nasdaq Clearing has assessed the SFSA's decision and has appealed the decision to the Administrative Court. See “Nasdaq Commodities Clearing Default,” of Note 14, “Clearing Operations,” for further information.

Other Matters

Except as disclosed above and in prior reports filed under the Exchange Act, we are not currently a party to any litigation or proceeding that we believe could have a material adverse effect on our business, condensed consolidated financial condition, or operating results. However, from time to time, we have been threatened with, or named as a defendant in, lawsuits or involved in regulatory proceedings.

In the normal course of business, Nasdaq discusses matters with its regulators raised during regulatory examinations or otherwise subject to their inquiries. Management believes that censures, fines, penalties or other sanctions that could result from any ongoing examinations or inquiries will not have a material impact on its condensed consolidated financial position or results of operations. However, we are unable to predict the outcome or the timing of the ultimate resolution of these matters, or the potential fines, penalties or injunctive or other equitable relief, if any, that may result from these matters.

Tax Audits

We are engaged in ongoing discussions and audits with taxing authorities on various tax matters, the resolutions of which are uncertain. Currently, there are matters that may lead to assessments, some of which may not be resolved for several years. Based on currently available information, we believe we have adequately provided for any assessments that could result from those proceedings where it is more likely than not that we will be assessed. We review our positions on these matters as they progress. See “Tax Audits,” of Note 16, “Income Taxes,” for further discussion.

18. BUSINESS SEGMENTS

We manage, operate and provide our products and services in four business segments: Market Technology, Investment Intelligence, Corporate Platforms and Market Services. See Note 1, “Organization and Nature of Operations,” for further discussion of our reportable segments.

Our management allocates resources, assesses performance and manages these businesses as four separate segments. We evaluate the performance of our segments based on several factors, of which the primary financial measure is operating income. Results of individual businesses are presented based on our management accounting practices and structure. Our chief operating decision maker does not review total assets or statements of income below operating income by segments as key performance metrics; therefore, such information is not presented below.

The following table presents certain information regarding our business segments for the three months ended September 30, 2021 and 2020:


	Three Months Ended September 30,
	2021		2020
	(in millions)
Market Technology
Total revenues	$	114	$	86
Operating income	10		9
Investment Intelligence
Total revenues	272		236
Operating income	177		153
Corporate Platforms
Total revenues	155		131
Operating income	65		51
Market Services
Total revenues	814		954
Transaction-based expenses	(519)		(698)
Revenues less transaction-based expenses	295		256
Operating income	187		154
Corporate Items
Total revenues	2		6
Operating income (loss)	(83)		(41)

Total
Total revenues	$	1,357	$	1,413
Transaction-based expenses	(519)		(698)
Revenues less transaction-based expenses	$	838	$	715
Operating income	$	356	$	326

The following table presents certain information regarding our business segments for the nine months ended September 30, 2021 and 2020:


	Nine Months Ended September 30,
	2021		2020
	(in millions)
Market Technology
Total revenues	$	332	$	251

Operating income	26		32

Investment Intelligence
Total revenues	787		654

Operating income	509		414

Corporate Platforms
Total revenues	451		382

Operating income	187		145

Market Services
Total revenues	2,823		2,855
Transaction-based expenses	(1,885)		(2,048)
Revenues less transaction-based expenses	938		807

Operating income	614		507

Corporate Items
Total revenues	26		21

Operating income (loss)	(239)		(182)


Consolidated
Total revenues	$	4,419	$	4,163
Transaction-based expenses	(1,885)		(2,048)
Revenues less transaction-based expenses	$	2,534	$	2,115

Operating income	$	1,097	$	916

Certain amounts are allocated to corporate items in our management reports as we believe they do not contribute to a meaningful evaluation of a particular segment's ongoing operating performance. These items, which are presented in the table below, include the following:

*•*Amortization expense of acquired intangible assets: We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations. As such, if intangible asset amortization is included in performance measures, it is more difficult to assess the day-to-day operating performance of the segments, and the relative operating performance of the segments between periods. Management does not consider intangible asset amortization expense for the purpose of evaluating the performance of our segments or their managers or when making decisions to allocate resources. Therefore, we believe performance measures excluding intangible asset amortization expense provide management with a useful

representation of our segments' ongoing activity in each period.

*•*Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction. Management does not consider merger and strategic initiatives expense for the purpose of evaluating the performance of our segments or their managers or when making decisions to allocate resources. Therefore, we believe performance measures excluding merger and strategic initiatives expense provide management with a useful representation of our segments' ongoing activity in each period.

Restructuring charges: We initiated the transition of certain technology platforms to advance our strategic opportunities as a technology and analytics provider and continue the re-alignment of certain business areas. See Note 19, “Restructuring Charges,” for further discussion of our 2019 restructuring plan. We believe performance measures excluding restructuring charges provide management with a useful representation of our segments' ongoing activity in each period.

*•*Revenues and expenses - divested/contributed businesses: We have included in corporate items the revenues and expenses of our U.S. Fixed Income business, which was previously included in our Market Services and Investment Intelligence results. See “2021 Divestiture,” of Note 4,“Acquisitions and Divestiture,” for further discussion of this divestiture. Also included are the revenues and expenses associated with the NPM business which we contributed to a standalone, independent company, of which we own the largest minority interest, together with a consortium of third party financial institutions in July 2021. Prior to July these revenues were previously included in our Corporate Platforms results.

Other significant items: We have included certain other charges or gains in corporate items, to the extent we believe they should be excluded when evaluating the ongoing operating performance of each individual segment. Other significant items include:

◦for the three and nine months ended September 30, 2021 and for the nine months ended September 30, 2020, a charge on extinguishment of debt;

◦for the three and nine months ended September 30, 2020, a provision for notes receivable associated with the funding of technology development for the consolidated audit trail; and

◦for the nine months ended September 30 2020, charitable donations made to the Nasdaq Foundation, COVID-19 response and relief efforts, and social justice charities.

The above charges are recorded in general, administrative and other expense in our Condensed Consolidated Statements of Income.

The following table summarizes our Corporate Items:


	Three Months Ended September 30,
	2021		2020
	(in millions)
Revenues - divested/contributed businesses	$	2	$	6
Expenses:
Amortization expense of acquired intangible assets	$	40	$	26
Merger and strategic initiatives expense	13		1
Restructuring charges	—		11

Provision for notes receivable	—		6
Extinguishment of debt	33		—


Expenses - divested/contributed businesses	—		4
Other	(1)		(1)
Total expenses	85		47
Operating loss	$	(83)	$	(41)

	Nine Months Ended September 30,
	2021		2020
	(in millions)
Revenues - divested/contributed businesses	$	26	$	21
Expenses:
Amortization expense of acquired intangible assets	$	116	$	76
Merger and strategic initiatives expense	70		12
Restructuring charges	31		36

Provision for notes receivable	—		6
Extinguishment of debt	33		36
Charitable donations	—		17

Expenses - divested/contributed businesses	10		13
Other	5		7
Total expenses	265		203
Operating loss	$	(239)	$	(182)

For further discussion of our segments’ results, see "Segment Operating Results," of “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

19. RESTRUCTURING CHARGES

In September 2019, we initiated the transition of certain technology platforms to advance the company's strategic opportunities as a technology and analytics provider and continue the re-alignment of certain business areas. In connection with these restructuring efforts, we retired certain elements of our marketplace infrastructure and technology product offerings as we implement NFF and other technologies internally and externally. This represented a fundamental shift in our strategy and technology as well as executive re-alignment. In June 2021, we completed our 2019 restructuring plan and recognized total pre-tax charges of $118 million over a two-year period. Total pre-tax charges related primarily to non-cash items such as asset impairments and accelerated depreciation, and third-party consulting costs. Severance and employee-related charges were also incurred.

The following tables present a summary of the 2019 restructuring plan charges in the Condensed Consolidated Statements of Income for the three months ended September 30, 2020 and for the nine months ended September 30, 2021 and 2020 which primarily consisted of consulting services, asset impairment charges primarily related to capitalized software that was retired, and accelerated depreciation expense on certain assets as a result of a decrease in their useful life.


	Three Months Ended September 30, 2020

	(in millions)
Asset impairment charges and accelerated depreciation expense	$	2
Consulting services	6

Severance and employee-related costs	2
Other	1
Total restructuring charges	$	11

	Nine Months Ended September 30,
	2021		2020
	(in millions)
Asset impairment charges and accelerated depreciation expense	$	4	$	10
Consulting services	19		15
Contract terminations	—		3
Severance and employee-related costs	1		3
Other	7		5
Total restructuring charges	$	31	$	36

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