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8/14/2019 Nasdaq Q307 Investor Presentation
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Copyright 2006, The Nasdaq Stock Market, Inc. All rights reserved. 1
The NASDAQ Stock Market
Investor Presentation
Third Quarter 2007
Copyright 2006, The Nasdaq Stock Market, Inc. All rights reserved.
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Leveraging Proven Strengths to Grow Profits
Opportunities
Growth in Equity Trading
Options Trading
Portal Market
Expanding Value-added IssuerServices
Global expansion and consolidations
Technology Leadership
Customer Focus
Efficient Operator
Proven Integrator
Strengths
combination
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Delivering Performance Improving Profits
0
20
40
60
80
100
120
3 Q05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2 Q07
0%
10%
20%
30%
40%
50%
60%
Operating Income
Operating Margin
104.1%49.8%24.4%Operating Margin
238.0%$56.1$16.6Net Income
172.7%99.041.8Operating Income
(26.0)%99.7134.8Total Expenses
16.1%198.7171.1Net Revenue
% Var2Q072Q06NASDAQ has successfully delivered on
financial and operating objectives resulting
in improved performance and profitability
Net revenue has increased for11 consecutive quarters overall
growth of73.1%
Operating margins have improved
dramatically (7.8)% in 3Q04 to 49.8%
in 2Q07
Net Revenue
0
50
100
150
200
250
3Q04 1Q05 3Q05 1Q06 3Q06 1Q07
CAGR=2
2.1%
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NASDAQ is Growing Volumes and Market Share
Structural changes including Reg NMS are providing opportunities for volume
growth and competition for trading NYSE-listed stocks.
- NASDAQ is now thesingle largest poolof liquidity for trading cash equities.
- CAGR in average daily matched volume for the past 6 quarters is 27%
0%
5%
10%
15%
20%
Jun- 05 Dec- 05 Jun- 06 Dec- 06 Jun- 07
1.12
1.31 1.35 1.341.56
1.61
1.27
4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Average Daily U.S. Equity Matched VolumeAverage Daily U.S. Equity Matched Volume NYSENYSE--Listed Matched Market ShareListed Matched Market Share
(billions)
Represents average daily share volume for U.S. equities
matched on Nasdaq execution systems
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Entering Derivatives with NASDAQ Option Platform
Growth in equity and index options contracts is strong, with volumes
growing nearly 30% year-over-year.
NASDAQ on track to launch an equity and index Options exchange in 2H
2007
This is an opportunity to take advantage ofmarket structure changes and
to leverage NASDAQs existing equity trading technology and
customer network
- Market Structure - The SEC has recently implemented a pilot for tradingoptions in penny increments which is moving the market towards an
order driven market from a quote driven market.
- Technology NASDAQs platform used to trade cash equities will be
leveraged to trade equity and index options.
- Customer Network - Existing technology network that links marketparticipants to NASDAQ will be used to connect them to NASDAQs
options market
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Portal Market
NASDAQ is the only US market with public and private capital formation
solutions
Creating a system to negotiate and trade 144A
securities among qualified Broker Dealers and
Institutional Buyers, bringing liquidity and
transparency to the market
ConceptConceptConcept
Global capital raised pursuant to rule 144A debt and
equity offerings exceeded $1.5 trillion in 2006*MarketMarketMarket
144A capital formation has tripled since 2002GrowthGrowthGrowth
* Global capital raised in conjunction with a 144a tranche (source Thompson Financial)
In 2006 seven of the top ten IPOs globally did a
144A tranche in conjunction with their offering
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Industry Leading Technology
Transaction Speed 1 second 1 millisecond
Transaction Peak Rates 1,000 tps. 200,000 tps.
System Reliability 99.98+% 99.98+%
State of the art platform is fast, scalable and reliable
Sub millisecond transaction speeds are fastest in the industry
Fully redundant data centers with hot-hot disaster recovery
Capacity to trade all U.S. listed equities
2001 2007
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Investment in London Stock Exchange
NASDAQ announced that it is exploring alternatives to divest its 30.5%
stake in the London Stock Exchange.
At the end of 2Q07 the carrying cost of the investment was approximately
$1.3 billion and the market value was approximately $1.6 billion.
NASDAQ will use approximately $1 billion of proceeds from any sale to
retire all outstanding senior term debt.
Remaining proceeds will be used to repurchase shares of NDAQ.
NASDAQ estimates that selling the stake will increase its stand-alone
earnings per share for 2008 by approximately $0.30 to $0.35.
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Leading global securities exchange
World leading technology provider
Global visibility for issuers
Competitive derivatives market offering
Enhanced strategic opportunities
Significant synergy potential
Leading U.S. exchange
#1 in U.S. IPOs andtransaction volume
Leading global brand
Worlds most efficienttrading engine
Efficient Operator
Successful integrator
Industry Leading Innovators are Combining
Group
Home to leadingcompanies
Worlds leading exchange
technology provider 3rd largest equity
derivatives exchange
Track record of successfulcross-border integration
The
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The Combination Creates an Exchange Company withMulti-Asset, Multi-Service Capabilities Across the Globe
Cash Equities
Derivatives
Commodities
Derivatives
Commodities
OTC
Companies
Warrants,ETFs
Funds
Bonds
CorporateClientservices
Dissemination
Equities
Derivatives Market
Analytics
Market Data
CashEquities
Derivatives
MutualFunds
Commodities
License
FacilityManagement
Network
BusinessProcessOutsourcing(BPO)
Trading Clearing Listing InformationServices GlobalTechnology
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NASDAQ OMX will have Geographic and Product
Diversification
Asia/Australia5%
US55%
Nordic26%
Rest of Europe14%
Revenues by RegionRevenues by Region Revenues by Product SegmentRevenues by Product Segment
Cash trading31%
Listings21%
Market data18%
Derivatives6%
Technology17%
Other7%
Source: 2006 NASDASQ and OMX data. Represents Pro-forma revenues
Note: OMX revenues converted at SEK/$ exchange rate of 6.665 as of July 11, 2007
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NASDAQ OMX Will Create the Worlds Premier Listing
Exchange
#1 in global listing (3,936 listings)(1)
#2 in market capitalization of listed
companies ($5.5 trillion)(1)
Diverse listings across all sectors
3,936 3,896
3,525 3,447 3,273
1,896 1,7061,196
761
2,425
NASDAQ OMX
Group
TSX Group NYSE/Euronext BME London Tokyo SE Australian
Exchange
Korea
Exchange
Hong Kong
Exchanges
Deutsche
Boerse
Sources:
(1) World Federation of Exchanges. As of 06/30/2007
(2) NYSE Euronext June data from July 10, 2007 press release
Total Number of Listings of Major Exchanges (1,2)Health Care
16%
Telecom. & Info.
Technology25%
Financials24%
Industrials13%
Energy & Utilities3%
Consumer16%
Materials3%
Sectors
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: A Highly Synergistic Combination
Shared Management
Vision
Relentless focus on continuous
innovation and growth
Shared Strategy of
Developing World Class
Technology as a
Competitive Strength
Shared Commitment to
Delivering Growth and
Creating Shareholder
Value
YOY net income growth of 238% in2Q 07
11 consecutive quarters of netrevenue growth
4 year operating profit CAGR of77%
Focus on cost efficiency Excludes discontinued operations
Industry leading execution speeds
Multi-asset processing capability
High capacity levels
Highly efficient operations
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Market Technology Partners and Customers in more than
50 countries
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Approx. $150M in Net Revenue and Cost synergies
Cost (1)
Synergies$100M
Revenue (1)
Synergies$50M
Transaction Services
Operations & Technology
European sales of NASDAQ products
U.S. broker-dealers buy OMX data
New products including index data feeds
Increased velocity on OMXs platform
Increased derivatives volume
Capitalizing on regulatory change
Dual listings
Access to U.S. private placement market via Portal
Higher share of growth in company listings
Cross-selling of Corporate Client Services
Integrate systems and platforms
Merging US operations
Leverage Genium platform
Consolidate real estate
Rationalization of overlapping functions andservices
Information Services
Issuer Services
Non-Technology
(1)
One-off pre-tax costs to achieve synergies are expected to be $150M over 2 years
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Proven Integration Capabilities
BRUT 2004
Carpenter Moore 2005
INET 2005
Shareholder.com 2006
Prime Zone 2006
Reykjavik 2006
Computershare MT 2006
Copenhagen 2005
Vilnius 2004
Tallinn 2003
Riga 2003
Helsinki 2003
Directors Desk 2007
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The NASDAQ Stock Market
Investor Presentation
Third Quarter 2007
Copyright 2006, The Nasdaq Stock Market, Inc. All rights reserved.
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