Revenue Recognition (Disclosures related to the adoption of ASC 606 on January 1, 2018)

In Note 2, we disclose the accounting policies associated with our material revenue streams that are applied in our consolidated financial statements. On January 1, 2018, we were required to adopt ASC 606 on a full retrospective basis and beginning in the first quarter of 2018 will restate each prior reporting period presented as if ASC 606 had always been applied. The adoption of ASC 606 does not have a material impact on the measurement or recognition of revenue in any prior or current reporting periods; however, additional disclosures required by ASC 606 are provided below for comparability purposes. Our adoption of ASC 606 was subject to the same internal controls over financial reporting that we apply to our consolidated financial statements. Terms as used below relate to how they are defined in ASC 606.

Substantially all of our revenues are considered to be revenues from contracts with customers. The related accounts receivable balances are recorded in our balance sheets as customer accounts receivable. We do not have obligations for warranties, returns or refunds to customers, other than the rebates discussed further below, which are settled each period and therefore do not result in variable consideration. We do not have significant revenue recognized from performance obligations that were satisfied in prior periods, and we do not have any transaction price allocated to unsatisfied performance obligations other than in our deferred revenue. Deferred revenue represents our contract liabilities related to our annual, original and other listings revenues as well as certain data services, clearing services and other revenues. Deferred revenue is the only significant contract asset or liability impacted by our adoption of ASC 606. See Note 9 for our discussion on deferred revenue balances, activity, and expected timing of recognition. We have elected not to provide disclosures about transaction price allocated to unsatisfied performance obligations if contract durations are less than one-year, or if we are not required to estimate the transaction price. For all of our contracts with customers, except for listings and certain data and clearing services, our performance obligations are short term in nature and there is no significant variable consideration. See below for further descriptions of our revenue contracts. In addition, we have elected the practical expedient of excluding sales taxes from transaction prices. We have assessed the costs incurred to obtain or fulfill a contract with a customer and determined them to be immaterial.

Certain judgments and estimates were used in the identification and timing of satisfaction of performance obligations and the related allocation of transaction price. We believe that these represent a faithful depiction of the transfer of services to our customers.

Our primary revenue contract classifications are described below. Though we discuss additional revenue details in our “Management Discussion and Analysis of Financial Condition and Results of Operations,” the categories below best represent those that depict similar economic characteristics of the nature, amount, timing and uncertainty of our revenues and cash flows.

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Transaction and clearing, net - Transaction and clearing revenues represent fees charged for the performance obligations of derivatives trading and clearing, and from our cash trading and equity options exchanges. The derivatives trading and clearing fees contain two performance obligations: 1) trade execution/clearing novation and 2) risk management of open interest. We allocate the transaction price between these two performance obligations; however both of these generally occur almost simultaneously, therefore, no significant deferral results as we have no further obligation to the customer at that time. Cash trading and equity options fees contain one performance obligation related to trade execution. Trade execution occurs instantaneously, therefore, there is no need to allocate the transaction price and no deferral results as we have no further obligation to the customer at that time. Our transaction and clearing revenues are reported net of rebates, except for the NYSE transaction-based expenses. Transaction and clearing fees can be variable based on trade volume discounts used in the determination of rebates, however virtually all volume discounts are calculated and recorded on a monthly basis. Transaction and clearing fees, as well as any volume discounts rebated to our customers, are calculated and billed monthly in accordance with our published fee schedules. We make liquidity payments to certain customers in our NYSE business and recognize those payments as a cost of revenue. In addition, we pay NYSE regulatory oversight fees to the SEC and collect equal amounts from our customers. These are also considered a cost of revenue, and both of these NYSE-related fees are included in transaction-based expenses. Transaction and clearing revenues and the related transaction-based expenses are all recognized in our Trading and Clearing segment.


•	Data services - Data service revenues represent the following:


◦	Pricing and analytics services consisting of an extensive set of independent evaluated pricing services focused primarily on fixed income and international equity securities, valuation services, reference data, market data, end of day pricing, fixed income equity portfolio analytics and risk management analytics.


◦	Desktop and connectivity services which comprise technology-based information platforms, feeds and connectivity. These include trading applications, desktop solutions and data feeds to support trading, voice brokers and investment functions.


◦	Exchange data services which represent subscription fees for the provision of our market data that is created from activity in our Trading and Clearing segment.

The nature and timing of each contract type for the data services above are similar in nature. Data services revenues are primarily subscription-based, billed monthly, quarterly or annually in advance and recognized ratably over time as our performance obligations of data delivery are met consistently throughout the period. Considering these contracts primarily consist of single performance obligations with fixed prices, there is no variable consideration and no need to allocate the transaction price. In certain of our data contracts, where third parties are involved, we arrange for the third party to transfer the services to our customers; in these arrangements we are acting as an agent and revenue is recorded net. All data services fees are included in our Data and Listings segment.

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Listings - Listing revenues include original, annual, and other corporate action fees. Under ASC 606, each distinct listing fee is allocated to multiple performance obligations including original and incremental listing and investor relations services, as well as a customer’s material right to renew the option to list on our exchanges. In performing this allocation, the standalone selling price of the listing services is based on the original and annual listing fees and the standalone selling price of the investor relation services is based on its market value. All listings fees are billed upfront and the identified performance obligations are satisfied over time. Upon our adoption of the ASC 606 framework, the amount of revenue related to the investor relations performance obligation is recognized ratably over a two-year period, with the remaining revenue recognized ratably over time as customers continue to list on our exchanges, which is generally estimated to be over a period of up to 9 years for NYSE and 5 years for NYSE Arca and NYSE American. Listings fees related to other corporate actions are considered contract modifications of our listing contracts and are recognized ratably over time as customers continue to list on our exchanges, which is generally estimated to be a period of 6 years for NYSE and 3 years for NYSE Arca and NYSE American. All listings fees are recognized in our Data & Listings segment.

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Other revenues - Other revenue primarily includes interest income on certain clearing margin deposits, regulatory penalties and fines, fees for use of our facilities, regulatory fees charged to member organizations of our U.S. securities exchanges, designated market maker service fees, exchange membership fees and agricultural grading and certification fees. Other revenues are recognized either in our Trading and Clearing segment or Data and Listings segment based on the nature of the revenue. Generally, fees for other revenues contain one performance obligation. Services for other revenues are primarily satisfied at a point in time, therefore, there is no need to allocate the fee and no deferral results as we have no further obligation to the customer at that time.

The following table depicts the disaggregation of our revenue according to business line and segment (in millions) prior to our adoption of ASC 606; as such, the segment totals here are consistent with the segment totals in Note 17:



	Trading & Clearing Segment		Data & Listings Segment		Total Consolidated
Year ended December 31, 2017
Transaction and clearing, net	$	3,131	$	—	$	3,131
Data services	—		2,084		2,084
Listings	—		417		417
Other revenues	202		—		202
Total revenues	3,333		2,501		5,834
Transaction-based expenses	1,205		—		1,205
Total revenues, less transaction-based expenses	$	2,128	$	2,501	$	4,629

Timing of Revenue Recognition
Services transferred at a point in time	$	1,897	$	—	$	1,897
Services transferred over time	231		2,501		2,732
Total revenues, less transaction-based expenses	$	2,128	$	2,501	$	4,629



	Trading & Clearing Segment		Data & Listings Segment		Total Consolidated
Year ended December 31, 2016
Transaction and clearing, net	$	3,384	$	—	$	3,384
Data services	—		1,978		1,978
Listings	—		419		419
Other revenues	177		—		177
Total revenues	3,561		2,397		5,958
Transaction-based expenses	1,459		—		1,459
Total revenues, less transaction-based expenses	$	2,102	$	2,397	$	4,499

Timing of Revenue Recognition
Services transferred at a point in time	$	1,874	$	—	$	1,874
Services transferred over time	228		2,397		2,625
Total revenues, less transaction-based expenses	$	2,102	$	2,397	$	4,499



	Trading & Clearing Segment		Data & Listings Segment		Total Consolidated
Year ended December 31, 2015
Transaction and clearing, net	$	3,228	$	—	$	3,228
Data services	—		871		871
Listings	—		405		405
Other revenues	178		—		178
Total revenues	3,406		1,276		4,682
Transaction-based expenses	1,344		—		1,344
Total revenues, less transaction-based expenses	$	2,062	$	1,276	$	3,338

Timing of Revenue Recognition
Services transferred at a point in time	$	1,841	$	—	$	1,841
Services transferred over time	221		1,276		1,497
Total revenues, less transaction-based expenses	$	2,062	$	1,276	$	3,338