Business Segments

3 Months Ended

Mar. 31, 2014

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Business Segments

16. Business Segments

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

Our reportable segments are as follows.

Market Services

Our Market Services segment includes our derivative trading and clearing, cash equity trading, fixed income trading, and access and broker services businesses.  We offer trading on multiple exchanges and facilities across several asset classes, including derivatives, commodities, cash equity, debt, structured products and ETFs. In addition, in some countries where we operate exchanges, we also provide investment firm, clearing, settlement and central depository services. Our transaction-based platforms provide market participants with the ability to access, process, display and integrate orders and quotes for cash equity securities, derivatives and ETFs. The platforms allow the routing and execution of buy and sell orders as well as the reporting of transactions for cash equity securities, derivatives and ETFs, providing fee-based revenues. In addition, eSpeed’s electronic benchmark U.S. treasury brokerage and co-location service businesses are part of our Market Services segment.

Listing Services

Our Listing Services segment includes our U.S. and European Listing Services businesses. We offer capital raising solutions to over 3,400 companies around the globe, representing approximately $8.8 trillion in total market value as of March 31, 2014.

We operate a variety of listing platforms around the world to provide multiple global capital raising solutions for private and public companies. Our main listing markets are The NASDAQ Stock Market and the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic. We offer a consolidated global listing application to companies to enable them to apply for listing on The NASDAQ Stock Market and the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic, as well as NASDAQ Dubai.In March 2014, we launched NPM, a marketplace for private growth companies.

Information Services

Our Information Services segment includes our Market Data Products and Index Licensing and Services businesses.

Our Market Data Products business sells and distributes historical and real-time quote and trade information to market participants and data distributers. Our market data products enhance transparency and provide critical information to financial professional and individual investors globally. In addition, eSpeed’s market data business is part of our Information Services segment.

Our Index Licensing and Services business develops and licenses NASDAQ OMX branded indexes, associated derivatives, and financial products and also provides custom calculation services for third-party clients.

Technology Solutions

Our Technology Solutions segment includes our Corporate Solutions and Market Technology businesses.

Our Corporate Solutions business serves corporate clients, including companies listed on our exchanges. We help organizations manage the two-way flow of information with their audiences through our suite of advanced technology, analytics, and consultative services. In May 2013, we acquired the TR Corporate Solutions businesses which were integrated into our Corporate Solutions business. With the acquisition of the TR Corporate Solutions businesses, Corporate Solutions revenues primarily include product revenues from the following key areas: governance, investor relations, multimedia solutions, and public relations.

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

Market Technology provides technology solutions for trading, clearing, settlement,  surveillance and information dissemination to markets with wide-ranging requirements, from the leading markets in the U.S., Europe and Asia to smaller African markets. Our solutions can handle a wide array of assets including cash equities, currencies, various interest-bearing securities, commodities, energy products and derivatives. Market Technology also provides broker services and enterprise governance, risk management and compliance software and services.

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 our management structure. Certain amounts are allocated to corporate items in our management reports based on the decision that those activities should not be used to evaluate the segment’s operating performance. See below for further discussion.

The following table presents certain information regarding these operating segments for the three months ended March 31, 2014 and 2013.  

	Market Services		Listing Services		Information Services		Technology Solutions		Corporate Items and Eliminations		Consolidated
	(in millions)
Three Months Ended March 31, 2014
Total revenues	$	582	$	58	$	123	$	135	$	-	$	898
Cost of revenues		(369)		-		-		-		-		(369)
Revenues less transaction rebates, brokerage, clearance and exchange fees		213		58		123		135		-		529
Operating income (loss)(1)	$	94	$	22	$	90	$	8	$	(30)	$	184
Three Months Ended March 31, 2013
Total revenues	$	508	$	55	$	106	$	75	$	-	$	744
Cost of revenues		(326)		-		-		-		-		(326)
Revenues less transaction rebates, brokerage, clearance and exchange fees		182		55		106		75		-		418
Operating income (loss)(2)	$	74	$	24	$	80	$	3	$	(91)	$	90

(1)Corporate items and eliminations for the three months ended March 31, 2014 primarily include merger and strategic initiatives expenses of $28 million primarily related to the acquisition of the TR Corporate Solutions businesses and other strategic initiatives. See “Acquisition of the Investor Relations, Public Relations and Multimedia Solutions Businesses of Thomson Reuters,” of Note 4, “Acquisitions,” for further discussion.

(2)Corporate items and eliminations for the three months ended March 31, 2013 primarily include expenses related to our voluntary accommodation program, expenses paid with respect to an SEC matter, restructuring charges, merger and strategic initiatives expense and special legal expenses.

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