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The NASDAQ OMX Group, Inc. (NASDAQ:NDAQ)

Q4 2009 Earnings Call

February 8, 2010 8:00 am ET

Executives

Bob Greifeld – CEO

Adena Friedman – CFO

Ed Knight – General Counsel

Vincent Palmiere – VP IR

Analysts

Daniel Fannon - Jefferies & Co

Richard Repetto - Sandler O'Neill

Michael Vinciquerra - BMO Capital Markets

Howard Chen - Credit Suisse

Roger Freeman - Barclays Capital

David Grossman - Thomas Weisel Partners

Niamh Alexander - Keefe, Bruyette & Woods

Edward Ditmire - Macquarie Capital

Celeste Mellet Brown - Morgan Stanley

Robert Napoli - Piper Jaffray

Jonathan Casteleyn - Susquehanna Investment Group

Johannes Thormann – HSBC Global Bank

Operator

Welcome to he NASDAQ OMX fourth quarter 2009 earnings results conference call. At this time I would like to turn the conference over to the Vice President of Investor Relations, Mr. Vincent Palmiere. Please go ahead, Sir.

Vincent Palmiere

Good morning everyone and thanks for joining us today to discuss NASDAQ OMX’s fourth quarter and full year 2009 earnings results. Joining me are Bob Greifeld, Chief Executive Officer; Adena Friedman, Chief Financial Officer, and Ed Knight, our General Counsel.

Following our prepared remarks we will open up the line for Q&A. You can access the results press release and the presentation on our website at www.nasdaqomx.com. We intend to use the website as a means of disclosing material, non-public information and for complying with disclosure obligations under the SEC Regulation FD and these disclosures will be included under the Events & Presentations section of the website.

Before I turn the call over to Bob I would like to remind you that certain statements in the prepared presentation and during the subsequent Q&A period may relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The actual results might differ materially from those projected in these forward-looking statements. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our press release and in our periodic reports filed with the SEC.

With that I will turn it over to Bob.

Bob Greifeld

Thank you Vincent, thank you everybody for joining us this morning to discuss our fourth quarter 2009 results. Today is a day of celebration for us at NASDAQ OMX and not certainly because the Saints won last night. Today, February 8 is the anniversary date of the date that NASDAQ was founded, so its our 39th birthday.

And we cannot think of a better way to celebrate than by announcing the launch of INET in seven of our cash equity markets in the Nordic and the Baltics. The launch of this trading platform is designed to increase liquidity, increase trading velocity, and improve operational efficiencies.

So if you’re in New York near our 1 Liberty Plaza office, please stop by for a birthday cake and a celebratory cake. Now I’d like to turn to the quarter, I will begin my remarks by spending a few minutes highlighting some key accomplishments and then update you on the progress of our initiatives. Adena Friedman, our CFO will walk you through the financials in details.

This morning we reported net income of $43 million or $0.20 per diluted share. On a non-GAAP basis we delivered a solid quarter with net income of $99 million or $0.46 per share, an increase of 11% when compared with pro forma non-GAAP net income of $89 million or $0.42 per diluted share for the third quarter of 2009.

During the quarter we witnessed growth in many of our business drivers enabling us to benefit from the scalable nature of our model. In European derivatives trading and clearing our volumes grew to more than 28 million transactions, up 18% from the third quarter of 2009 and reaching the highest levels for the year.

In January, 2010 we saw volumes grow again with average daily volume increasing another 18% from fourth quarter levels. Leading this growth in volume is the volume that transitioned from EDX during the quarter. Our contract with EDX ended in December and we were successful in moving virtually all the volume in OMX branded derivatives from EDX to our derivatives trading platform in the Nordics.

In conjunction with this transition we welcomed 34 clearing members to our European clearing house in December. This increased our total membership by 60% when compared to the prior year. Many of the new members are London-based and previously cleared with LCH.

As members of our European clearing house they now have access to all our fixed income, equity, index, and commodity derivatives products through one trading and clearing platform. Finally within European derivatives we witnessed growth in our commodities businesses where cleared energy contracts were up 14% from the fourth quarter of 2008 and 28% from the third quarter of 2009.

In cash equities we successfully introduced essential counterparty clearing in the fourth quarter and during this transition we were able to maintain market share of approximately 84%. Although value traded declined slightly from the third quarter, in January 2010 we saw activity rebound as average daily value traded increased to 2.7 billion Euros, up 23% from the fourth quarter.

Also the average number of trades in January increased 30% from the fourth quarter. So with the increase in January activity and today’s successful launch of INET we are certainly off to a good start. Now turning to the US in our options market the combined share of our two markets grew to 22% from 20% in third quarter of 2009 with volumes growing 8%.

Part of the increase in share gains was volume related to dividend capture trades, activity that yields us a lower average fee per contract. As a result total revenues declined modestly when compared to third quarter of 2009. In US cash equities while we saw industry volumes decline in the fourth quarter by 12%, when compared to the third quarter 2009 levels the combined market share of NASDAQ and BX increased reaching 24%, up from 22% in the third quarter.

In January after a slow start volumes and market share bounced back to levels consistent with those realized at the beginning of the fourth quarter and so far February is looking even better, in particular last week. Additionally consistent with the guidance we provided during our call last quarter, our average net fee per match share increased 30% from the third quarter following adjustments to our fee structure for BX in September and NASDAQ in November.

In access services, again consistent with our guidance revenues increased to $39 million, up from $36 million in the third quarter of 2009 reflecting the continued shift in our business model to one that includes increasing fee based revenues. In issuer services our business welcomed 143 new listings during 2009.

There were 67 in the fourth quarter alone. Of these new listings 33 were Chinese companies, NASDAQ now has 124 Chinese company listings, more than any other US exchange. Included in the new listings for 2009 were 34 IPOs, 31 of which came to market in the second half of the year. During the fourth quarter we witnessed a remarkable performance by our team.

Ten companies switched their listings from markets that comprised [NYSE] [Euronext]. In 2009 a total of 24 companies decided to switch to NASDAQ including 10 from NYSE and 14 from NYSE Amex. Collectively these companies represent more than $150 billion in global market capitalization. Corporate services continues to do well as the competitive advantages offered by these products are increasingly driving the listing decisions.

Specifically pinpoint market intelligence our stock surveillance group has witnessed growth in clients of nearly 60% from the prior year and 10% from the third quarter of 2009. In market technology we had one of the strongest periods in the fourth quarter of 2009. While part of the strength is driven by seasonally higher fourth quarter activity, the market technology business is sound and is growing.

Order intake for the quarter grew to $148 million representing an increase of more than five times from fourth quarter 2008 levels, and up fourfold from the third quarter. Total order value which represents contracts signed but yet to be delivered while consistent with prior year levels increased 30% from the third quarter 2009.

And as we enter 2010 we see continued strength in the business following the recent contract wins of Osaka Stock Exchange and the Kuwait Stock Exchange. We’re confident that customers will increasingly recognize the value of our technology solutions and we believe we’ll see additional announcements regarding contracts for [inaudible] INET in 2010.

Now let me review the status of some of our initiatives, on January 12 together with Nord Pool Spot we launched our power market in the UK with the goal of establishing a liquid market and transparent price for the industry. As the reference price is established on a spot market it will then be used as a basis for derivatives scheduled to launch later this year.

Following the launch the spot auction and forward markets have functioned well with prices having been set for each and every hour, 24 hours a day, since we began trading. We continue to have strong industry support and remain excited about the prospects for this business.

Another exciting development is the completion of the first cross border merger of clearing houses with the combination of Nord Pool and Nordic clearing houses. This integration delivers on the promise of the Nord Pool acquisition as it creates a clearing house to meet the demands of customers trading in multiple asset classes.

In 2010 we plan to drive growth by leveraging our clearing expertise and scalable technology to deliver enhanced services across financial derivatives and commodity products. And as we launch our UK power derivatives market those same benefits will be available to an expanding membership.

Here in the US we remain on track to launch a new price size trading platform using the PHLX exchange license which we intend to launch in May pending SEC approval. This new market structure will enable clients to execute larger orders in a lit market environment by providing execution priority based on the size of the entering order.

It will also leverage the scale of our existing technology to introduce functionality to our customers and truly is another example of how we continue to look for opportunities to be innovative and create value.

In December we signed a commercial contract with BBMFBOVESPA regarding global distribution of market data and the provisioning of NASDAQ OMX products and corporate services to public companies in Brazil. NASDAQ OMX also announced plans to develop a communications system to facilitate the routing of orders between participating brokers located in the United States and brokers located in Brazil.

This is subject to required regulatory approvals and other conditions. Now turning to IDCG, our interest rate swap clearing business, in December the House of Representatives passed financial reform legislation that mandates central clearing for standardized OTC contracts. As this reform bill moves through the Senate we applaud the efforts of Washington to introduce sensible regulation designed to increase transparency.

The overall debate on regulatory reform has been robust with a clear recognition in Congress and the regulators that transparent markets are a valuable and important element of creating sustained financial stability. With respect to IDCG we continue to work intensely with clients to integrate our offerings into their work flow and as I said before progress in this venture will accelerate as more certainly of financial legislation develops.

Gauging the positive feedback from clients we continue to have confidence in the strength of our unique offerings. With respect to regulatory developments, as we consider the broader regulatory landscape both with the legislative debate on regulatory reform and the SEC’s concept release on market structure reform, we are pleased to see an active and healthy debate on these topics as they impact not only our industry but investors across the country.

We truly believe in the value of debating substantial matters that are fundamental to our financial system. As passionate supporters of transparent markets given that it is fundamental to who we are as a company, and as a regulator we trust that Congress and the SEC will find solutions that [inaudible] the competitive transparent markets with open and fair price discovery for the benefit of all market participants and investors.

Now looking back on the past year we experienced some of the most difficult recessions of our lifetime. Entering 2009 we had to face challenges such as a dearth of IPOs, shrinking industry employment, and a credit crisis that threatened businesses for all our customers and yet as we exit the year we are very proud of the resilient nature of the NASDAQ OMX business model.

In the face of economic upheaval we achieved some important accomplishments that contributed to the continued development of our global business. We launched BX, a new trading venue which is now a meaningful contributor to our strategy and our earnings. We found new pockets of market data users, increasing the distribution of our US proprietary data products.

We complete the integration of PHLX as promised with the implementation of the INET system for all of our US options trading. We completed the first cross border regulatory merger of two clearing houses with Nord Pool and our Nordic clearing house while welcoming 34 new London based members. We continue to find ourselves to the be the natural strategic technology partner to some of the largest exchanges in the world as the Tokyo commodity exchange went live on our platform and two additional leading exchanges, the Kuwait Exchange and the Osaka Exchange signed on as new clients.

Finally both rating agencies upgraded NASDAQ OMX debt ratings validating the resiliency of our business model and the expense and capital discipline of our organization. Looking into 2010 we are experiencing some strong tailwinds in our core businesses including a strong IPO pipeline, growing employment in the financial industry as both Morgan Stanley and Bank of America/Merrill Lynch announce plans for new hirings, strong US and European trading market share, improving volumes and value traded in Europe, and extremely healthy order intake for market technology.

Additionally as I stated earlier we continue to make significant progress in delivering incremental growth through our new initiatives. We are enthusiastic about our prospects for 2010 and look forward to delivering on that enthusiasm through results. With that, I’ll turn the call over to Adena.

Adena Friedman

Thank you very much Bob and good morning everyone. Thanks for joining us today. This morning we reported that net income attributable to NASDAQ OMX for the fourth quarter on a GAAP basis was $43 million or $0.20 per diluted share.

The GAAP results include an impairment of $51 million related to our investments in Dubai and Agora-X net of tax, $16 million in pre-tax expenses related to occupancy sublease reserves, work force reductions and other non recurring items, and $12 million of pre-tax gains on the sale of certain businesses.

Excluding these items our non-GAAP net income for the fourth quarter of 2009 was $99 million or $0.46 per diluted share, an increase when compared to non-GAAP net income of $89 million or $0.42 per share in the third quarter of 2009 or a decrease when compared to the non-GAAP net income of $110 million or $0.52 per diluted share for the fourth quarter of 2008.

As you can see on slide six of our presentation this impacts the non-GAAP diluted EPS was $0.01 when compared to non-GAAP EPS in the third quarter of 2009 of $0.02 when compared to the fourth quarter of 2008 when you’re looking at the impact of FX rates on our results.

Reconciliations of GAAP to non-GAAP results can be found in the attachments to our press release and in the presentation that’s available on our website at www.ir.nasdaqomx.com. Consistent with our prior calls the remainder of my comments will address our non-GAAP results unless I note otherwise.

Net exchange revenues were $369 million, an increase of $20 million or 6% when compared to the third quarter of 2009 but a decrease of 8% when compared to the prior year quarter. US cash equities revenues were higher when compared to the third quarter of 2009 due to a 30% increase in the average fee per matched share which resulted from the introduction of a revised fees for BX in early September and NASDAQ in early November.

European cash equity trading revenue declined slightly when compared to the third quarter of 2009. This modest decline is due to lower value traded which declined to 139 billion Euros from 141 billion Euros in Q3 2009. Also contributing to the decline are fee changes that were introduced with the implementation of central counterparty clearing during the fourth quarter of 2009.

Derivative revenues were $57 million in Q4 2009 versus $54 million in Q3 2009. Driving the increase when compared to the third quarter are derivative revenues in Europe which were $26 million, up from $20 million in the third quarter. This increase is primarily related to the growth in cleared energy products and the transfer of derivative volume from EDX to NASDAQ OMX.

Also contributing to growth in revenues is a partnership with broker dealers to launch a retail oriented trading platform called The Order Machine, or TOM. In our continuing efforts to improve the transparency of our revenue model, beginning this quarter I will provide additional details by product group for our European derivatives revenues. Additionally our goal in the first quarter is to begin providing daily volume information on our website.

Total revenue in the fourth quarter of 2009 from cleared energy and carbon products was $10 million. Trading and clearing of stock and index derivatives contributed $8.4 million. Revenue from clearing of fixed income products was $4 million and TOM revenue and other fees were $4 million.

In the US market net derivatives revenues were $31 million in the fourth quarter representing a decline when compared to $34 million in the third quarter. Despite and increase in market share across PHLX and the NASDAQ options market in the fourth quarter the decline when compared to the prior period is due to reductions in the average net fees per contract which is primarily the result of a higher level of dividends capture trades in December which command a lower fee.

As we guided on the third quarter call access service revenues were $39 million for the fourth quarter up from $36 million in the third quarter. Driving the increase are revised fees and growth in demand for [collocation] services. Market data revenues were $83 million for the fourth quarter up $4 million when compared to the third quarter of 2009.

The increase when compared to the third quarter is due to higher NASDAQ MBX trading and quoting market share and continued growth in our US proprietary products. Broker services was $6 million in the fourth quarter down $3 million from the third quarter but the decline is primarily due to the sale of our UK broker services business.

In Q4 2009 we recognized approximately $1 million from our UK broker services business versus $3 million in Q3. Issuer revenues were $82 million for the quarter an increase of $1 million or 1% from the prior quarter. Somewhat offsetting this increase is a reduction due to the fourth quarter sale of Carpenter Moore, the insurance brokerage business.

Revenues from Carpenter Moore was $1 million in the fourth quarter down from $3 million in the third quarter of 2009. The revenue increase in issuer services when compared to the third quarter of 2009 is primarily due to our continued growth in the corporate services business as well as higher market capitalization values for European listed equities which in turn results in higher European listing fees.

As Bob mentioned the market technology business had a great quarter with revenues at $44 million up $8 million or 22% when compared to the third quarter of 2009. These robust results are partly related to the seasonal nature of this business as well as to increases in deliveries of short-term technology contracts.

The market technology business revenue is derived by both large implementation projects where in accordance with GAAP a portion of the revenue is amortized over the life of the agreement as well as shorter duration enhancement project where the revenue is recognized immediately upon delivery.

Therefore there can be some lumpiness to the revenues on a quarterly basis for the market technology business depending upon the mix of deliveries of large implementations and small enhancements and in the fourth quarter we were the beneficiary of an increase in demand for short-term projects.

Now turning to expenses, for the fourth quarter spending was $204 million representing an increase of $7 million or 4% from the third quarter of 2009 primarily due to an increase in compensation expense and a seasonal increase in our advertising spend. When comparing expenses for the full year of 2009 to 2008 we were very successful in maintaining our expense control discipline.

On slide 12 of the presentation you can see that for the year we reduced our core spending by $136 million or 14% from 2008. Operating income for the fourth quarter was $165 million with operating margins coming at 45%. During the fourth quarter we agreed to increase our ownership interest in Agora-X, a joint venture between NASDAQ OMX and SC Stone that provides electronic trading of OTC commodities primarily energy derivatives.

We now have an 85% ownership in Agora-X up from 20% in prior periods and will start to consolidate results of this business into our financials in 2010. Because the most recent valuation of this business was lower than the original valuation made at the time of our initial investment we are taking an impairment on the carrying value of $5 million.

Also during the quarter we signed a binding term sheet with Borse Dubai in the Dubai financial market or DFM, to convert our 33 1/3% interest in NASDAQ Dubai, a small international exchange into a 1% stake in DFM which is one of the most successful publically traded exchanges in the Middle East.

DFM is buying our interest as well as Borse Dubai’s interest in NASDAQ Dubai, in order to take 100% ownership of the company. NASDAQ Dubai will continue to be operated as a separate subsidiary of DFM independently regulated by the Dubai FSA. Also we will continue to maintain a seat on the NASDAQ Dubai Board.

As a result in this change in ownership we took an impairment charge on our investment in NASDAQ Dubai, specifically our original investment included $50 million of cash as well as binding license agreements for our brand and technology. Therefore the combined carrying value of our original investment at the time of this transaction was $120 million.

Based upon and consistent with a third party valuation of NASDAQ Dubai we have accepted a 1% stake in DFM and associated with this transaction we have recorded a noncash impairment charge of $82 million which net of taxes is $46 million.

Net interest expense in the fourth quarter was $22 million, down $1 million from the third quarter of 2009. Total interest expense in the fourth quarter of 2009 was $25 million and is comprised of $15 million in interest expense, $3 million of noncash expense associated with the accretion of the 2.5% convertible notes, $3 million in noncash deal amortization expenses, and $4 million in other related fees.

As shown on slide 13 of the earnings presentation subsequent to year end we refinanced our existing debt by completing a $1 billion underwritten public offering of five year senior secured notes at 4% interest and 10 year senior unsecured notes at 5.55% interest and we entered into new senior unsecured credit facilities providing for up to $950 million in borrowings including $700 million in funded term loans at a rate of LIBOR plus 200 basis points, and $250 million in unfunded revolving credit commitments.

The refinancing provides increased flexibility regarding the use of free cash, extends the maturity date of our debt obligations and reduces our interest rate risk. Additionally NASDAQ corporate debt ratings were recently upgraded by both Standard & Poor’s to BBB, and Moody’s to Baa3. The ratings now reflect an investment grade profile from both agencies.

As a result of this refinancing we expect to recognize a noncash charge of approximately $30 million in the first quarter of 2010 related to the acceleration of deal costs from the original term loan. In addition we expect to realize a loss of approximately $10 million due to terminating an interest rate swap contract that was used to hedge our interest rate exposure for the original term loan.

Finally our interest expense for 2010 will include approximately $6 million in noncash amortized deal expenses associated with the new debt. We will also continue to include approximately $14 million in noncash accretion expense associated with the 2.5% convertible notes and approximately $6 million in other fees and expenses.

And finally on the income statement the effective tax rate for Q4 2009 was 32% within the range of our normalized tax rate of 32% to 34%. Now turning briefly to the balance sheet cash and cash equivalents and financial investments at quarter end were approximately $1 billion. Of this amount approximately $469 million is reserved for regulatory requirements.

For the full year of 2009 cash flow from operations was approximately $582 million which capital spending of $59 million, $13 million of which came in the fourth quarter. Our total debt obligation at the end of 2009 were $2.1 billion reflecting a decline in the total principal amount of our debt of $432 million from the 2008 year end.

The new term loan requires us to begin paying down the debt at $35 million per quarter beginning in the third quarter of 2010 although we expect to over deliver on that amortization schedule.

Now looking forward for the full year of 2010 we expect total expenses will be in the range of $865 million to $885 million at current FX rates. Included in these figures are approximately $50 million of non recurring expenses including those associated with the recent debt refinancing I mentioned earlier.

Also included in this guidance is $54 million in discretionary R&D spending for new initiatives slightly above the 2009 spending of $51 million for new initiatives. In conclusion, in 2009 we continued our intense focus on controlling expenses and managing the balance sheet. We continue to drive down core operating costs and exit non core businesses and investments, providing us the opportunity to pursue new growth initiatives in a disciplined manner while improving our cash position.

To enhance our financial flexibility and lower our debt commitments we converted [inaudible] notes, reduced our other debt obligations by over $330 million and ultimately refinanced our term loan to put us in a much improved financial position. Due to our financial discipline in 2009 as we enter 2010 we are now well positioned to take advantage of positive trends in our core businesses as well as progress in our new initiatives to drive earnings growth for our shareholders.

Thank you and I will now turn it back over to Vince.

Vincent Palmiere

At this time we are going to take questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Daniel Fannon - Jefferies & Co

Daniel Fannon - Jefferies & Co

You’ve historically kind of mapped out what you think the revenue opportunities are for some of your new initiatives and ranked them and I think last call you mentioned IDCG as being the biggest and just wanted to get an update. You still have several things out there that you’re working on, what you think has the biggest opportunity, both near-term as well as long-term in terms of your initiatives.

Bob Greifeld

We certainly believe that the interest rate swap market is the largest untapped market for us to try and gain traction in. And our feeling is its almost hard to comprehend in 2010 that a market that large really doesn’t have any sort of basic organization to it. So that stands alone.

Many good things going on here, I would certainly direct you to the UK power market where as I said in my prepared comments the spot market is at this point very successful. The large opportunity for us is in the derivatives market and its our goal to have that derivatives market launched sometime in the spring.

So we’re optimistic about that. We are certainly excited about what a price size market can mean. Its hard for us to quantify us that in any meaningful way at this point in time. We also have to get regulatory approval for that effort. So I would say just a number of good things going on here and they have different dimensions to them, size led by IDCG. I think immediacy by UK power but like any of these investments you make you never know which one’s going to win at the end of the fourth quarter.

Daniel Fannon - Jefferies & Co

And then with regards to your MTF in Europe can you give us some color as to what you think has been the challenge there for you in terms of gaining market share in a meaningful way as some people have, if it was just a first mover advantage with some of the other upstarts or what you think you need to do to get that going.

Bob Greifeld

I think you need to have basic and fundamental deal support for your MTF and for us to get the higher levels of success in that market we’re going to have to be that much closer to our customers.

Daniel Fannon - Jefferies & Co

And so are you doing things now to, initiatives or programs to get that going.

Bob Greifeld

Yes, when you certainly recognize the problem being that you have to have the dealer support and that support has to come in some basic and fundamental way we’re working hard at making that happen.

Operator

Your next question comes from the line of Richard Repetto - Sandler O'Neill

Richard Repetto - Sandler O'Neill

First congrats on the upward trend in the revenue captured equities, you broke the trend.

Bob Greifeld

That we did, we did. We’re also happy with the $0.46 a share, that was a good trend reversal.

Richard Repetto - Sandler O'Neill

First question is on the balance sheet and the debt restructuring, and with the restructuring can you talk a little bit about the flexibility in regards to what your capital management strategy and the flexibility or not do you get in regards to acquisitions, buybacks, and dividends.

Adena Friedman

For the first time in two years, we do have financial flexibility in terms of how we use our existing cash and how we can continue to use debt as a means for us to grow. So I think that the new term loan does give us the flexibility to use our cash to buyback shares or pay dividends as well as the acquisitions and investments and we also have the ability to increase our debt to take on acquisitions if we like.

That’s one of the main focuses of the refinancing was to give us that new flexibility.

Bob Greifeld

The other thing I would say is we recognize that we’re not a bank, we have a large amount of excess cash on the balance sheet today. You’re keenly aware that this business model generates a lot of cash and that number will obviously increase then as 2010 waxes on. So I think its definitely a consideration of the management and the Board of Directors of NASDAQ OMX in terms of how to best deploy that capital and its something that we’ll be thinking about in the weeks and months to come.

Richard Repetto - Sandler O'Neill

And then the follow-up question is on expenses, normally there has been an associated drop in technology expenses and actually people as well with the consolidation of the platforms and we know INET and now you said whatever, seven or eight Nordic, I guess the question is this already in the run rate because we see the modest uptick in overall year over year expense guidance but is there incremental expense savings from the platform consolidation.

Bob Greifeld

I would say this, one in terms of the move to the consolidated platform today that obviously will result in some expense synergies within the context of NASDAQ OMX in the time to come. But its important to recognize that that’s a smaller scale against a larger organization. So when you look at the expense guidance today it represents some decrease in expenses based upon the [inaudible] today but also there’s other parts of the businesses where we have growth opportunities where there’s necessarily some increases in expenses.

So that’s how we net them out in the guidance that we gave.

Adena Friedman

That’s exactly right. We continue to drive efficiency in the operations, and we do have that type of synergy associated with retiring facts of when that happens this year but we also have other areas where we want to invest in our growth.

Richard Repetto - Sandler O'Neill

And then you did touch a little bit on the regulatory landscape and it looks promising, you’re access services collocation revenues went up as you predicted, what’s been the demand of collocation given the increased visibility the SEC has brought on at say in the last month and a half or so. Could you still see increases in revenues due to collocation.

Bob Greifeld

Definitely, I think the deliberations that the SEC or others willing to take will have zero impact in terms of the business that we have in collocation access services. And in a certain respects increased regulation could be seen as a positive because clearly our collocation business is under the regulatory regime of the SEC. They have complete and transparent insight into the business and I think they’re aware that we run this as a fair access standard business where we make sure that every single customer of ours is treated in the exact same manner and as we’ve spoken about before we ensure that if somebody is 50 feet from the matching engine they have an identical user experience to somebody who is 300 feet.

So there’s a lot of pluses to how we run the collocation in terms of fairness so we think that will be a positive for us in the days to come.

Operator

Your next question comes from the line of Michael Vinciquerra - BMO Capital Markets

Michael Vinciquerra - BMO Capital Markets

I just wanted to go back to the new technology in the Nordic, can you give us a sense for the speed differential between INET and the previous platform you had in place there just to give us a sense for what traders are seeing in terms of increased performance.

Bob Greifeld

Definitely, as you know they’re getting the new version of INET in the Nordics, we’re down to about 250 microseconds, so its about a tenfold increase in speed in the environment. And I think as important as the speed is the fact that we now have a common interface. So our customers in the US or customers in London can essentially do a plug and play into the Nordic marketplace today.

So we certainly expect to see increasing velocity coming on the heels of the go live to date today.

Michael Vinciquerra - BMO Capital Markets

And now that you have that project out there, are you going to start looking at rolling INET out to your OMX technology customers to give them the same advantages.

Bob Greifeld

Well its interesting I spoke of [Genium] INET and really this is one of the wonderful outcomes of the merger together, so when you look at the INET technology it is the best in class at handling high volumes of relatively simple instruments. The old OMX technology had the ability to process any variety of asset class, any variety of instrument. So with the Genium project we’re basically using the messaging layer of INET to deliver outstanding speed and combining that which was the application functionality that [Click] brought to the marketplace. So I think you’ll see the vast majority of our customers choose the Genium power by INET platform.

Michael Vinciquerra - BMO Capital Markets

And then in the tech business, nice surge there of course from revenues, can you give us a sense for what the margins are in that business today and what a reasonable expectation would be going forward.

Bob Greifeld

I’d say the margins are better than they’ve ever been. It was a relatively low bar. We have established a long-term goal for this business to get it in and around a 30% margin business which we think is reasonable for a technology business. Its not going to be the level of some of our other businesses and I think today we’re in the mid teens.

Adena Friedman

Yes, I think that we actually ended the year probably closer to 20% in that business.

Michael Vinciquerra - BMO Capital Markets

And then on the option side, you talked a bit about the growth in market share and of course you mentioned the dividend trading having an effect there, but net revenues actually down $3 million sequentially and I calculate you’d probably traded about 16 million more contracts, was there anything besides the dividend trading that lowered your net capture in that business or is that something, the only driver there that changed things.

Bob Greifeld

I don’t want to say the only driver but it was the dispositive driver so whatever else happened was really not material. It was the dividend trades.

Operator

Your next question comes from the line of Howard Chen - Credit Suisse

Howard Chen - Credit Suisse

Happy Birthday to the exchange.

Bob Greifeld

We’re going to be a perpetual 39 now. This is it.

Howard Chen - Credit Suisse

You start counting backwards now, I know there’s a lot floating around Washington right now, I just had a question specifically about the Volcker Rule and the proposals to curb proprietary trading, could you just help us frame how you think about the contribution to your business, or overall market volumes that’s driven from sell side trading operations.

Bob Greifeld

That’s a great question, its kind of impossible for us to answer because we don’t have the orders coming in delineated between proprietary and non-prop and in a sense that shows you the difficulty that the legislators would have prescribing anti prop trading. I think it’s a hard job for them to do because once you get into what’s prop, what’s customer facilitation, what’s riskless principal, it gets impossible. So I think they would have to find a different path to go would be my personal feeling.

So we certainly see our customer business primarily focused on serving the buy side institutional efforts and we certainly don’t think that will be impacted by whatever comes out of Washington.

Howard Chen - Credit Suisse

And then switching gears, a follow-up on market technology and the really strong results maybe could you provide us any sense of the composition of the order intake and the big backlog improvement, I don’t know if its geographic or newer versus legacy customers, and how reliable do you think those figures are as we think about the trajectory of that growth going forward.

Bob Greifeld

One is when you look at 2010 in market technology the success was driven by I think a multitude of smaller projects and that has a way of hitting the income statement sooner rather than later. So when we look across our broad range of customers we did I think a good business with the vast majority of them in 2009.

I think 2010 is going to be characterized by large amounts of business with a smaller subset of our customer base.

Adena Friedman

I think we look at the fact that we’ve got Osaka and Kuwait coming on, we also have some larger enhancement initiatives that we hope to achieve in 2010, and those can have some level of delay in terms of revenue recognition since with US GAAP you have to wait until you’ve delivered and the customer has accepted the enhancement. But at the same time we do get continuous requests from our clients to do small enhancements.

We call them client requests, CRs, and we continue to see a very healthy number of those coming in but sometimes we don’t, they’re less easy to predict because as they go through the year they might need a small enhancement that needs to get done so you kind of have layered on top of each other some larger implementations in 2010 along with just a continuous request for enhancements coming from our clients.

So its very good, the numbers that we provided you are in fact as we said committed just not delivered and that means that the revenue will be coming forward as we get those implementations completed.

Bob Greifeld

And the general comment I will make is that the technology we provide to our fellow exchanges is fundamental to their success. We provide the central matching engine, we provide the core clearing technology. So in that environment there is always things to be done with our customer base. And I think we’ve become increasingly effective at providing those services and that helped drive our 2009 results.

Adena Friedman

I just want to finalize by saying one thing about architect though, is we’re spending a lot more time with our clients looking at a more holistic view of their exchange in terms of how we can be a strategic partner to them with technology as the foundation so with some of our clients they are looking at our corporate services and how they can deploy those to our issuers.

They’re looking at how we can leverage the global market data distribution and broaden their distribution market data and there are other partnership opportunities that are going to come and those will also help bring in revenue probably more towards revenue sharing or what I would call shared risk model.

Howard Chen - Credit Suisse

Was hoping you could provide a bit more detail about the $54 million of discretionary spending, where is it heading in 2010 and maybe help us frame how you gauge the payoff from the $50 million-ish you spoke to spending in 2009, [inaudible] a lot of that was longer term growth initiative in nature.

Bob Greifeld

I would say this, with these initiatives its very important for us to know when to move on from the initiative so we have I think a very good cross functional management process to make sure everything we do is evaluated. We also take an initiative away from this category when it has been profitable for a period of quarters.

So as we look at 2010 obviously BX and NOM moved from the new initiative category to part of our core operations in terms of how we manage it. So there’s always more demand for investment dollars than we have supply which I think is a healthy dynamic within the organization. With respect to the new initiatives some of them are small, some medium, some large.

We tend to highlight the larger ones on the call. Those that have a bigger claim on the balance sheet. The two biggest efforts right now with respect to dollars are IDCG and [Nuro]. But they’re just one of a number of new initiatives. So I’m not sure what your question was anymore.

Operator

Your next question comes from the line of Roger Freeman - Barclays Capital

Roger Freeman - Barclays Capital

I guess just coming back to Nuro, it sounds like your refocusing on the dealer fund to get support but dealer support has been the hallmark of your new initiatives, I guess is it that the opportunity has changed where you can get dealer support now where you couldn’t before with turquoise or have you really sort of changed attacks with respect to how you approach it.

Bob Greifeld

I think both factors are coming into line for us. Clearly we led with low pricing and with a small [order] router in, with the benefits of hindsight we probably would have led with a consortium based effort. So I think in terms of our mental evolution combined with other things that are going in the market it seems to be a opportune time for us to do something a little bit differently.

Roger Freeman - Barclays Capital

And then as you look at the increased flexibility that you’ve got now under the credit agreements, number one, did they previously hamper any strategic initiative that you would have undertaken.

Bob Greifeld

I would say no, but they probably would have. Let’s take credit for what we accomplished in 2009. We completed the integration of Philly, we completed the integration of Nordic in particular the clearing houses and certainly came to the end of our NASDAQ OMX integration highlighted by the achievements today and as we’ve said to everybody before we’ve always built upon a solid platform and we wanted to make sure that operationally we were integrated before we would contemplate doing anything larger.

So I think the timing worked out well where we are now able to declare victory with respect to the acquisitions we have done. We have delivered to our investors and to our customers what we’ve promised and now through the actions of our financial staff we have that kind of flexibility. So it puts us into a different place.

Roger Freeman - Barclays Capital

I was getting at it from an acquisition perspective, because one of the things you had hinted at was that you thought you’d be in a position to consolidate over in Europe and you haven’t done anything yet and obviously you’ve had a lot on your plate but it hasn’t been the financial flexibility that’s prevented that.

Bob Greifeld

No, we certainly had a lot to accomplish in 2009 which we’ve done. If we didn’t do what we did on the refinancing then certainly in 2010 it would have been a barrier.

Roger Freeman - Barclays Capital

Looking back at the US market share December and January we saw some reversal of the share gains over the course of the fall, internalization was up, couple of your smaller competitors were gaining again, can you just kind of talk to some of the dynamics there.

Bob Greifeld

I would also direct you to the fact that we certainly have made progress in the latter part of January and certainly more progress again in February so I would attribute this more to the ebb and flow. We’re happy with the share gains in the fourth quarter, we’re happy with what we’ve done now in the first quarter and as you know we live in time where we still have individual stocks that can drive market share and depending upon how you’re positioned in that stock at that moment in time, its either a plus or a minus.

So in the grand scheme of the market share battle I think its just noise, and we feel happy with our progress.

Operator

Your next question comes from the line of David Grossman - Thomas Weisel Partners

David Grossman - Thomas Weisel Partners

It seems like there were a lot of moving pieces in the fourth quarter, a lot of things actually reversing in your favor I think access services we had a price increase, we changed the pricing structure in the US and the transfer from EDX to OMX, did you get a full quarter of benefit from that in the fourth quarter or should we continue to see some tailwinds at least on a run rate basis into the March quarter.

Adena Friedman

In terms of the changes in pricing on the US side, we did see a full quarter effect from the change in the BX pricing but two months of effect from the change in the NASDAQ pricing. So there could be a little bit of a pickup on that. And then on EDX most of the change in the move over to the Nordic trades system at clearing house came in December, actually the very end of November up to December 7th so we really did not see a full quarter effect of that. In fact most of the numbers came in right at the end and they started trading and clearing really starting in December. So we should see more tailwinds coming from that initiative.

And then lastly in the access services side we did see a full quarter effect because that change in pricing was made in the middle of the third quarter.

Bob Greifeld

And I would just add that we have seen on a fairly dramatic uptick in the equity trading in the Nordics in the first quarter of 2010, so that’s been quite pleasant.

David Grossman - Thomas Weisel Partners

And then on the pricing side, obviously you took the move in the fourth quarter and your share really was relatively stable if not improving modestly after that change, is your gut feeling that we’ve gotten to a point where pricing is really stabilized in the US.

Bob Greifeld

I think I’ve said in previous calls that the pricing battles are more around the edges where we all recognize that we have customers across a wide spectrum who have different initiatives and goals through our pricing actions. And you have to decide through your pricing actions which subset of your customers you choose to attract.

And every action you take has equal and opposite reaction and then you have to gauge the net effect. So when I look at the pricing actions in 2009 it was contemplated in 2010 its more of the to and froing around which subset of customers you’re trying to get and it’s a fundamentally different game than what existed in 2007 where it was a net wholesale reduction across a wide range of customers.

Operator

Your next question comes from the line of Niamh Alexander - Keefe, Bruyette & Woods

Niamh Alexander - Keefe, Bruyette & Woods

This is the second consecutive quarter now where your derivatives net revenues exceeded your cash which is congrats to you on the diversification, can I just ask if you take a step back for the options industry how should we think about NASDAQ taking leadership there with some changes because we’ve got the [bifurcated] pricing structure, you’ve got both models right now, is now a good time to think about maybe moving the Philly onto the make or take model or especially with the high frequency volume starting to pick up.

Bob Greifeld

I was concerned that you might find bad new in the fact that our derivatives revenue is doing so well, I’m glad you haven’t. So we’re proud of that. And your question leads right into as you’re obviously aware of what we did in January with the pro rater make or take program with Philly. And we started it with the [spiders] and in November we had about 7.6% market share. In January it shot up to 21.1 and in February its running at 21.5.

So clearly this is probably the first hybrid market structure that has worked and its worked from the get-go in a dramatic way. So we’re learning from that and again we’re breeding a culture of innovation in NASDAQ OMX and this is clearly indication of that and we’re proud of it.

And that we rolled it out to a couple of options in February and we’ve seen also dramatic changes, we went from 16% to 26% just in, from the beginning of the month. So we’re proud of that. So we’re on to that and we certainly intend to take a leadership role in leveraging the strengths of the dealer market combining it with the maker taker.

Niamh Alexander - Keefe, Bruyette & Woods

And just help me understand, I assume the maker taker is typically more lucrative for an exchange, what would be the objection, or what would be the impediments should we say to do a more aggressive transfer over to the maker taker, is the risk that you lose the customer volume.

Bob Greifeld

I would not say, I would not agree with your premise that its more lucrative. It really depends and I think in the options world the maker taker is lucrative but I don’t mean to any way point any negative comments on the dealer centric model there.

We play with both. Its really a question what does the customer want and what can you do to leverage your existing platform so we’re focused on that. And when you look at the pro rate maker taker that we rolled out it did have capabilities in that plan to make sure it retained its attractiveness to retail order flow.

Niamh Alexander - Keefe, Bruyette & Woods

And then just I know you like to lever the mother ship when we talk about non organic growth but if you could update there in terms of are we still thinking about putting new products on existing platform or should we maybe think about NASDAQ expanding into kind of new services as it were, maybe some more horizontal integration. Like new kind of services instead of just products shall we say.

Bob Greifeld

Let me talk about our listings business for a second where I think we’ve led the world in providing additional services to our listed companies and you see that that provision of services is one driving revenue growth for us, increasingly driving profit growth and also driving switches. So when you look at the number of companies that switched from competing exchanges to NASDAQ OMX the provision of services directly from us has been a key differentiator.

So we want to continue with meeting our customer needs, continuing to drive our revenue growth in that business and I think you’ll see us intensify our effort in that area in the time to come and we think that’s just a wonderful growth opportunity. We have this privileged relationship with 4000 listed companies and its our job to make sure that we one, provide services and lever that distribution channel.

Niamh Alexander - Keefe, Bruyette & Woods

If I could clarify real quick, with respect to the expense guidance there was just over like $30, $35 million related to the debt retirement, would that be kind of the one-time in the first quarter.

Adena Friedman

I’d say its closer to $40 million because it was $30 million associated with accelerating the fees from the old debt and then $10 million from the expiration of the interest rate swap so its closer to 40 on related to that particular transaction and then the other $10 million or so is really related to continued efforts in the technology area to become more efficient and as we do that we’re going to have some one-times associated with that effort throughout the year so that’s pretty much what comprises the full $50 million.

Niamh Alexander - Keefe, Bruyette & Woods

And then with respect to the debt, would that most of it hit in the first quarter.

Adena Friedman

It will all be in the first quarter.

Operator

Your next question comes from the line of Edward Ditmire - Macquarie Capital

Edward Ditmire - Macquarie Capital

Is there anything discrete that might be keeping you from doing a stock buyback such as being a load to take on more financial leverage after getting your debt upgrade or is it should we simply interpret the decision between buybacks which seem like they would be highly accretive right now with the stock at 9x versus M&A opportunities that of course could offer more upside.

Bob Greifeld

Our stock is at 9x, that seems mighty low doesn’t it. I would say this as I said before we now have flexibility. We have excessive cash on our balance sheet and we certainly recognize we’re not a bank. I think our Board of Directors recognizes that and its for the Board to consider how to best allocate that capital.

And this is something that we will be focused on in the weeks and months to come.

Edward Ditmire - Macquarie Capital

There’s no preexisting buyback authorization.

Bob Greifeld

No.

Operator

Your next question comes from the line of Celeste Mellet Brown - Morgan Stanley

Celeste Mellet Brown - Morgan Stanley

Just coming back to the Nordic surprising on a positive front that you maintained your share on the equity side, can you help us think about the competitive dynamics over the next 12 months, a lot of changes with clearing and INET launching today, do you expect to see more competition coming into that market as your competitors see the increased volumes etc.

Bob Greifeld

Let’s say this as compared to a year ago, we are certainly significantly better positioned to compete. So a year ago we had an environment where the lack of CCP gave a fundamental advantage to MPS out in London. So today we have CCP, a year ago we had a platform while improved was not competitive with other MPS. Today we have the fastest platform on the planet running our Nordic marketplace. So we feel obviously very strong that we’re in a position to grow this market in some fundamental ways.

We know our market is incredibly attractive to our US based customers now that we have essentially a plug and play capability. And I think its important to recognize the pricing action we took in the Nordics in January and it was a new and creative response as an established exchange to the pending competition from MTS and other exchanges and we allow people to essentially hit a max payment rate to us.

And this allows us to lock into revenue that we had in 2009 and the ability to then grow that revenue based upon new entrants coming into the marketplace and that as I said is different, we haven’t seen it done by any established exchange before. We think it will be surprisingly effective.

Celeste Mellet Brown - Morgan Stanley

And sticking to the Nordics, again on the derivatives side how tight do you think you have a grasp on the derivatives volumes that have moved over from EX. We’ve seen talk of competitors trying to step up their efforts in that market. Do you feel like now that you’ve made the move you’ve locked it or there’s still some risk as the year progresses.

Bob Greifeld

There’s always risk but the greater risk was moving the volume away from EDX so we definitely feel proud of the fact that that volume essentially moved. I won’t say 100% but certainly 99% of the volume has moved. So there’s always risk but on a scale the risk is dramatically declined to where it was three and six months ago.

We will continue to stay close to our customers and make sure that we’re delivering value to them. And obviously they have recognized that by the wonderful success we had in December of 2009. And I think its important to recognize now with this EDX transition we have essentially turned our Nordic clearing house into a European clearing house. The new members, the 60% growth in membership was driven not by new members from the Nordics, but by European members coming in and they also requested us to make some changes to our clearing house practices that brought it more in line to what they are expecting in Europe and we have done that.

And so now this clearing house is positioned, we have the connectivity with the customer base and there’s many ways we can lever this clearing house in the time to come.

Operator

Your next question comes from the line of Robert Napoli - Piper Jaffray

Robert Napoli - Piper Jaffray

Question on, just to follow-up on the US options business it does, what do you view the outlook for capture rates in the US options business as we move into 2010 and 2011. It does seem like the competitive battles are maybe ramping up somewhat there and I know you talked about the mix in the fourth quarter but I was wondering if you could give a little bit of an outlook, your best feel for capture rates.

Bob Greifeld

I would focus on the market structure first and foremost. So it’s a little bit different than the equity dynamic so the nature of the market structure and the participants who are engaged in your market structure in some ways are more important than your particular nominal rate on a transaction. So we have to continue to deliver market structure innovations and advancements that retains and increases our customer base. So certainly with the pro rate maker taker model we put into Philly we’ve done that. We increased share. We have some reduction in rate for those particular options but clearly the overall revenue has increased dramatically.

So I think the options space is more nuance than the equity space and allows I think a good management team the opportunity to execute very well.

Robert Napoli - Piper Jaffray

A question on the access services revenues and margin, can you remind me the pricing, how you price that business and what are the, if you give some feel for the operating margins on the access services business.

Adena Friedman

So on access services we, its purely a monthly fee although we do allow people if they want to pay forward essentially and guarantee their [inaudible] for a year, they can pay us a slightly reduced rate and knowing that we have a year revenue locked in.

But generally it’s a monthly fee and it depends on the service so if they’re getting just a port, just a fixed connection into our market, its in the hundreds of dollars a month. But if they’re collocating in our data center and putting servers in the data center we call them cabinets, then they’re paying us a few thousand dollars a month to collocate those servers and some customers will have one server and some customers will have 25 servers. Just depends on how much volume they’re flowing into the marketplace.

And then they also pay for the market data that they’re receiving as a distributor so they’re paying the distributor fees for the market data that they’re receiving as well. So it adds up to a few thousand dollars a month and I think all of our rates are published so they’re available for everyone to see and everyone pays the same.

But it is essentially monthly revenue. In terms of margin its not dissimilar to the overall margins in market services. We don’t break out the services margins but under the new contract with Verizon that we entered into late last year we feel comfortable in saying that the margins on that are at least the same as what we get overall for market services.

Robert Napoli - Piper Jaffray

How much capacity do you have to grow that business as far as the collocation portion, what kind of a revenue growth rate would you place on that business over the long run.

Adena Friedman

In terms of capacity we actually Verizon completed a build out of the data center and we have the ability, we actually have a further build out later this year locked into our contract so that we have the ability to essentially I think we tripled the capacity of the data center associated with the build out.

So we now have excess space and the ability to take in new demands from clients and I think that its something that we expect to continue to grow in terms of demand and we’re out there actively selling space.

Bob Greifeld

As we said a year ago we had more demand than supply. We have that in the right balance right now where we have supply certainly for what would be the foreseeable future and the sales force is out there selling.

Robert Napoli - Piper Jaffray

And then just on the deal front now that you do have more flexibility I was wondering if you could give a little color into what opportunities you see in the market. I’m sure any time anything is available that you are on the distribution list, is there a lot of activity going on in the market today.

Bob Greifeld

We’re an automatic recipient of any deal and that’s probably not that far from the truth, but that being said in the environment you describe which we essentially agree with, the necessity of maintaining discipline is paramount and so we do that. We have our north star in terms of which guides us. We have to be leveraging the mother ship. It has to accrete within 12 months. Very large deals can go slightly longer but not so much longer that you’re trying to predict the future.

So that being said there’s definitely opportunities out there. Things that we consider. But our discipline will always guide us.

Operator

Your next question comes from the line of Jonathan Casteleyn - Susquehanna Investment Group

Jonathan Casteleyn - Susquehanna Investment Group

You mentioned starting the trading of your UK power business within the next six months how does that compare to your original scheduled timeframe and is there any way to quantify the impact either in startup costs or new earnings.

Bob Greifeld

Its sooner than we originally thought and the good news here is the users in the marketplace, the spot market are saying you need to go live sooner rather than later. And at this point in time its our internal issues to be ready to go live. So we thought we had six months, we have less time than that. We’re working hard to make it happen sooner.

That being said we’re not quantifying at this point what the revenues are. We just know that the UK power market is roughly equivalent in size to the Nordic power market and you can see how large an opportunity that is for us.

Adena Friedman

And I would say in terms of the investment its really existing resources that we’re using to build out this capability because its obviously building on the strength of our know how and our expertise in the Nordic power market so its basically leveraging the systems and people we already have.

Bob Greifeld

And the work we did to consolidate the clearing houses in 2009 provides the platform for us to now lever that to use it for UK power so that network has been done and its not so much incremental expenditure it’s a question of what takes the priority. So we’ve moved this up on the priority list with respect to our projects and obviously there’s a cost on the downstream of some other things that are not getting done.

Jonathan Casteleyn - Susquehanna Investment Group

So any costs associated with the initiative are in your run rate guidance.

Bob Greifeld

No doubt.

Jonathan Casteleyn - Susquehanna Investment Group

And then any chance we can get an update on the Borse Dubai holding, I know they’re a separate entity, but any communicate with them and any sort of indication of their longer term intentions with the stock holding.

Bob Greifeld

Well as you know we have representatives on their Board, they’re actively engaged Board members and they have certainly communicated to us in no uncertain terms that they are long-term holders of their position in NASDAQ OMX.

Operator

Your final question comes from the line of Johannes Thormann – HSBC Global Bank

Johannes Thormann – HSBC Global Bank

One question, you talked about your success in migrating business from EX to your own strong Nordic [inaudible] and mentioned also clearing what is your risk for this migration if a competitor buys EMCF from [inaudible] or a majority stake at least in that platform.

Bob Greifeld

Well those two are not related, to the EDX’s are NASDAQ OMX branded license derivatives products. EMCF was set up as a cash equity clearing house. We currently own 22% of it. At the time of the investment we made it very clear that we were not trying to create a vertical silo and we invited others whether it be exchanges and/or MPF to take an equity interest in EMCF.

Our goal with respect to clearing in Europe is to create a competitive dynamic that drives down the cost of clearing in Europe but then has a secondary benefit of increasing the velocity of trading in the market.

Operator

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Bob Greifeld

Thanks everybody for joining us here, the Monday after the Super Bowl on our 39th birthday. We’re certainly proud of the year we had in 2009 against difficult macroeconomic and microeconomic conditions. It certainly I think shows the resiliency of our business model and we look forward to executing very well as we always do against a more promising environment in 2010 and look forward to speaking to you in three months’ time. So thank you.

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Source: The NASDAQ OMX Group, Inc. Q4 2009 Earnings Call Transcript
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