Highlights From NDAQ's Q3 Conference Call: Company's Hit Milestone Event When Market Cap Over $100 Billion switches to the NASDAQ

Nasdaq OMX Group Inc. (NASDAQ: NDAQ) reports Q3 EPS of $0.42, inline with the analyst estimate of $0.42. Revenue for the quarter was $349 million, which compares to the estimate of $354.92 million.

Highlights From NDAQ's Q3 Conference Call:

• (CEO) We do continue to see improvements in key market trends in all of our US and European marketplaces. This quarter we saw our US cash equity market share continue to improve, and at 25% is nearing levels that we haven't seen since February.
  
• Within US equity options, the average daily volume matched by our systems is improving with October ADV at 2.8 million contracts, up roughly 12% from the ADV of 2.5 that was realized in July and August.
  
• In Nordic cash equities, overall the market has realized a broad recovery with the OMX30 index up 43% year-to-date. In October, we registered the highest level of activity for the calendar year in both the value traded and the number of trades, as value traded reached 56 million.
  
• We're pleased to report that our market share has remained around 85%. This is the highest of any of the established European exchanges.
  
• Turning to Nordic derivatives. Volumes are also at the highest levels of the year, reaching 12.9 million contracts, up from an average of 10 million for Q3of 2009.
  
• As many of you are aware, we continue to be highly successful with switches from markets that comprise the NYSE, with seven in the third quarter alone, including R.R. Donnelly, Mattel, and TriMas. Year-to-date, we've captured 18 switches totaling 135 billion in global market cap, with Vodafone being among the most recent.
  
• As many of you are aware, we continue to be highly successful with switches from markets that comprise the NYSE, with seven in the third quarter alone, including R.R. Donnelly, Mattel, and TriMas. Year-to-date, we've captured 18 switches totaling 135 billion in global market cap, with Vodafone being among the most recent.
  
• Truly it's a milestone event when a company with a global market cap over $100 billion switches to the NASDAQ stock market.
  
• Our IPO wins and the success of our switch program are being driven by our corporate services program, the value of which is increasingly the differentiating factor in company listing decisions.
  
• At BX, the second cash equity market that we launched earlier this year, market share and volume has continued to improve. During the third quarter, BX's market shareof US cash equities was 2.7%, up 1% from the second quarter of 2009. Even more impressive than that is the fact that share continued to grow in October and averaged 3.7% with volume averaging 340 million shares per day.
  
• With respect to IDCG, our interest rate swap clearing and settlement sub, interest in this initiative continues to grow and we now have over 20 sell-side, buy-side and GSE market participants that have submitted deals worth over $850 billion of notional value into our shadow clearing environment, off from $450 billion in the second quarter.
  
• With respect to our efforts in Norway, in the quarter we were able to grow our share to 2% -- 2.4% on Norwegian cash equities.
  
• Our share of the FTSE 100 and the CAC 40 routinely exceeds 2.25% market share. We are clearly pleased with that progress.
  
• Now as we look towards 2010, we obviously - we'll be looking at new initiatives beyond what we have in the pipeline today. We currently have three exchange licenses; NASDAQ, BX and PHLX and there are two ways to leverage each of these assets, either by creating a listings market or launching a trading venue.
  
• (CFO) Net exchange revenues were $349 million, a decrease of $62 million or 15% year-over-year.
  
• Total expenses were $197 million, representing a decline of 25 million or 11% from $222 million in the third quarter of 2008.
  
• The primary driver of our expense reductions are synergies resulting from the successful integration of OMX and PHLX.
  
• And finally, on the income statement, the effective tax rate for Q3 2008 was 32%, slightly below our normalized rate of 33%.
  
• Cash, cash equivalents, and financial investments at quarter-end were approximately $781 million.
  
• Our total debt obligations at the end of the quarter were $2.089 billion, reflecting a decline in the total principal amount of our debt obligations of $452 million from 2008 year-end. Consistent with our plan to reduce debt, we paid down $112 million of our term loan during the quarter, bringing us to a total repayment of $225 million for 2009 year-to-date. Also, at the end of the third quarter, Silver Lake converted all of their 3.75% convertible notes into common equity, reducing our outstanding debt obligations by $119 million.
  
• We are updating our 2009 full year expense guidance and now expect total operating expenses to be in the range of 840 million to $850 million. Including in these figures are approximately $50 million of non-recurring expenses up from $30 million in our prior guidance, thus leading to recurring expenses of 790 million to $800 million for 2009. This guidance reflects a partial quarter impact of the sale of Carpenter Moore and UK Broker Services.
  
• (Q&A) guess, just on the incremental revenues that you are seeing, are they -- you expect in Q4, the only one that I was sort of wanted to ask a question is on BX; is there any share - we're seeing a little bit of share deterioration even from October. So what's your view that the price sensitivity on your customers to the price change?
  
• (A)Well, I would direct you back to what we call NASDAQ classic, because that pricing change went in effect November 1 and we have had a slight uptick in market share in the three or four days we've had here. But our comments with respect to the BX revenue we feel very comfortable with.
  
  

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