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Executives

Vince Palmiere - Vice President of Investor Relations & Nasdaq Corporate Finance and Head of Nasdaq Activities

Robert Greifeld - Chief Executive Officer, Staff Director, Member of Executive Committee and Member of Finance Committee

Adena Friedman - Chief Financial Officer and Executive Vice President of Corporate Strategy

Analysts

Niamh Alexander - Keefe, Bruyette, & Woods, Inc.

Alex Kramm - UBS Investment Bank

Edward Ditmire - Macquarie Research

Christopher Allen - Ticonderoga Securities LLC

Celeste Brown - Morgan Stanley

Rob Rutschow - Credit Agricole Securities (USA) Inc.

Michael Carrier - Deutsche Bank AG

Richard Repetto - Sandler O`Neill

Michael Vinciquerra - BMO Capital Markets U.S.

Howard Chen - Crédit Suisse AG

Patrick O'Shaughnessy - Raymond James & Associates

Christopher Brendler - Stifel, Nicolaus & Co., Inc.

Christopher Harris - Wells Fargo Securities, LLC

Daniel Fannon - Jefferies & Company, Inc.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

Mark Lane - William Blair & Company L.L.C.

Matthew Heinz - Jefferies & Company

Justin Schack - Rosenblatt Securities

Roger Freeman - Barclays Capital

Daniel Harris - Goldman Sachs Group Inc.

Nasdaq OMX Group (NDAQ) Q3 2010 Earnings Call October 29, 2010 8:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the NASDAQ OMX Third Quarter 2010 Results Conference Call. [Operator Instructions] I would now like to introduce your host for today's conference, Vince Palmiere, Vice President, Investor Relations.

Vince Palmiere

Thank you, operator. Good morning, and thank you for joining us today to discuss our third quarter 2010 earning results. Joining me are Bob Greifeld, our Chief Executive Officer; Adena Friedman, our Chief Financial Officer; and Ed Knight, our General Counsel. Following our prepared remarks, we'll open up the line for Q&A. You can access the result's press release and presentation on the NASDAQ OMX Investor Relations 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 SEC Regulation FD. And these disclosures will be included under the Events and Presentations section of the site.

And before I turn the call over to Bob, I’d 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 may differ materially from those projected in these forward-looking statements, and 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. And with that, I'll turn the it over to Bob.

Robert Greifeld

Thank you, everybody for joining the call this morning. I'll begin by spending a few minutes highlighting the third quarter 2010 results, and then I will update you on the progress we are making with some of our initiatives. Adena will then walk you through the financials.

This morning, we reported net income of $101 million or $0.50 per diluted share, an increase of 79% when compared to the third quarter 2009 GAAP results and an increase of 19% when compared to non-GAAP results. This represents an incredibly strong performance and we are delighted, particularly given the lower industry volumes we saw during the quarter. Our success can be attributed to the steps we have taken to diversify our business and to identified opportunities to deliver value-added products and services to our customers.

During our recent analyst day, we outlined how we have focused our efforts and goals on revenue growth measured as either in alpha or beta return, with alpha representing our hard work and innovation, and beta primarily driven by volume and other macro-markets trends. What we're particularly pleased with this quarter is that despite significant volume or beta headwinds, we were able to grow revenues and profits over the prior year due to successful alpha return initiatives. These results showed that our hard work is paying off and delivering results.

Turning to the details of the quarter, in Market Services, revenues increased $18 million or 8% from the third quarter of 2009, despite declines in industry volumes in U.S. cash equities and options. The revenue growth was driven by strong demand for Access Services, higher U.S proprietary market data revenue, increases in U.S. cash equities revenue and growth in European derivatives revenue, all areas where we've been able to innovate and expand our value proposition for customers. In particular, we have seen significant improvement in our European Clearinghouse, where growing membership is driving increased activity, resulting in a revenue increase of 30% over the last year.

In the Nordic derivatives market, earlier this week, we launched our Genium INET platform, the world's fastest trading and clearing system. Genium delivered sub-100 microsecond latency and a throughput of over 1 million messages a second, a highly reliable robust and scalable platform.

In addition to powering our own markets is also part of our commercial exchange technology offering, putting the same power in the hands of our customers. We remain committed to innovation through technology to ensure our leadership position as a driving force in the exchange industry and to provide the best possible trading opportunities for our customers and investors.

In our U.S. Options business, we are number one in market share, and we achieved our fifth consecutive quarter of market share growth. Total market share was 28.8% for the quarter, as PHLX recorded 23.7% and now 5.1%, the highest levels ever achieved by either market. Our share last year across both markets was 20.2%, so this year's results reflect the gain in share of 850 basis points. Very impressive.

In our Issuer Services segment, NASDAQ OMX signed 45 new listings during the quarter, an increase of 29% over the prior year quarter, of which 18 were IPOs including two of the largest technology IPOs, SMART Technologies and NXP Semiconductors. Corporate Services continued to be a bright spot, as we saw increased demand for many new products, in particular new services such as AI3, our new surveillance product. That is driving revenue growth.

When you exclude the impact of Carpenter Moore, which was sold in the fourth quarter of 2009, existing product revenues increased 20% from prior year levels. And finally, within the Issuer Services, revenues in our Global Index Group were up 20% from last year, driven by increased demand for new license ETFs and other financial products.

In our industry leading Market Technology segment, business remain strong as total order value, which is the value of signed contracts that have yet to be delivered ended the quarter up 40% from third quarter 2009 levels. Highlighting the quarter was the acquisition of SMARTS Group, the world leading provider of market surveillance technology to exchanges, regulators and brokers. Integration efforts are off to a good start, and we expect to realize measurable synergies by leveraging our footprint to deliver growth. Our technology platforms remained core to our success. We have the fastest and most scalable trading technology in the world, multi-asset trading and clearing capabilities, and a culture of efficiency. When combined, these assets create a unique formula for success that remains unparalleled in the industry.

Now let me touch on the status of some of our initiatives. Progress continues to be made in IDCG, our interest rate swap clearinghouse, as BNY Mellon became a clearing member and State Street announced its plans to become a member. IDCG has also started to process transactions, and today has cleared $640 million, with nearly $400 million in notional value outstanding. Our innovative new price size equity exchange, PSX, was launched on October the 8th, and is off to a fantastic start. In two week since its launch, there's already averaging nearly half a point of market share each day, and has exceeded 50 million shares traded daily, making it the most successful launch of an equity exchange, exceeding even the launch of our BX exchange. Also, the value of this unique model is apparent, as average execution size is up over 30% when compared to trades executed on the rest of NASDAQ.

N2EX, our UK power market, now has a total of 19 members actively supporting the exchange, as it continues to attract the liquidity necessary for creating the power index. Volumes have grown approximately 100% since the end of the second quarter. That's more than $740,000-megawatt hours traded each week with a value of more than GBP 32 million. We plan to launch the derivatives market in the first quarter of 2011.

With respect to NOCC, our U.S. Energy Clearing business, we're pleased to report that we're seeing increased activity as more trades are being processed through our clearinghouse. Initially, trades were for contracts with a very short durations. However, recently, we have seen larger trades with longer durations, the most recent being a three-month contract. As customers begin to clear contracts with longer durations, it demonstrates an increased confidence in the clearinghouse.

As we announced at our Investor Day, we launched in repo clearing in the Nordics on September 23, and we have seen volumes steadily improve. Our goal is to have the full interbank market, which represents some $6 million in average daily volume by the beginning of 2011 on our market. Following our transaction between SAB and the Swedish National Debt Office, we continue to work with Nordic banks to develop swap-clearing for the entire market. Our goal remains on a full-scale launch for the second half of 2011.

This week, we also announced the launch of five Nasdaq OMX Alpha indexes, which are designed to measure performance between a particular stock and ETFs, giving our customers the ability to look for opportunities to generate returns. Eventually, these indices will allow us to list proprietary auctions on the PHLX and NOCC, and are certainly indicative of culture of innovation that we have developed here at NASDAQ. We are pleased with the progress of each initiative, and remain excited about their prospects. Our strategy clearly is to continue to lever our full strengths to diversify our product offering and to deliver growth whether it's through new capabilities, trading new asset classes, expanding geographically or attracting new clients.

Before I turn the call over to Adena, I want to once again touch on the strength of our performance this quarter, which is no more apparent than when you compare our results to the very strong second quarter of 2010. While industry activity declined 26% for U.S. cash equities, and 19% for auctions when compared to the second quarter, our earnings only declined 4% from a record $0.52 to $0.50 this quarter, results that we are proud of and from which we plan to grow. I will now turn the call over to Adena.

Adena Friedman

Thank you, Bob. Good morning, everyone, and thanks for joining us today. Our GAAP net income for the third quarter for 2010 was $101 million, or $0.50 per diluted share, equal to our non-GAAP net income and EPS at the same period. This represents a slight decrease when compared to non-GAAP income of $108 million or $0.52 per diluted share in the second quarter 2010, but an increase of 13% when compared to the non-GAAP income of $89 million or $0.42 per diluted share for the third quarter of 2009.

Reconciliations of GAAP to non-GAAP results can be found in the attachments to our press release and in the presentation as available on our website at ir.nasdaqomx.com. Net revenues were $372 million for the quarter, a decrease of $18 million or 5% when compared to the second quarter of 2010, but an increase of $23 million or 7% when compared to the prior year quarter. Within market services, our net cash equities trading revenues were $63 million, a decrease of 17% or $13 million when compared to the second quarter of 2010, primarily due to declines in U.S. industry volumes, which were off, as Bob said, 26%. However, cash equities trading revenues increased $15 million or 31% when compared to the third quarter of 2009, primarily due to modified rates and improved marketshare in our U.S. business.

Net derivatives trading and clearing revenue were $60 million in the third quarter versus $69 million in the second quarter of 2010, and $54 million in the third quarter of 2009. The decline, when compared to the second quarter, is due to lower industry trade activity in both the U.S. and Europe driving the increase when compared to the prior year quarter were higher volumes in our European business. Equity and index options and future volumes was up more than 40% from last year, while fixed income volume was up 14%, as Bob mentioned, driving this higher activity, our increases in our membership as well as overall macroeconomic recovery in the Nordic countries. Membership in the clearinghouse, particularly for equities and index options was up approximately 100% from the third quarter of 2009.

Included in the third quarter of 2010 revenues are $8.9 million from cleared energy and carbon products, $11.3 million from trading and clearing of stock and index derivatives, $4.4 million from the clearing of fixed-income products, and approximately $1.5 million of other revenues and fees.

Moving to Access Services, revenues were $45 million dollars for the quarter, up from $41 million in the second quarter, and up $7 million or 18% from the third quarter of last year on the strength of increased demand for our services. Within market data, revenue was $76 million for the third quarter, down $3 million when compared to the second quarter of 2010 and the third quarter of 2009. The decline, when compared to both periods, is due to lower U.S. tape plan and European market data revenues. The decline in European revenues is partially due to lower audit fees realized this period, somewhat offsetting the declines when compared to the prior year period or higher revenues associated with the U.S. proprietary data products. In Issuer Services, revenues were $85 million for the quarter, down $1 million when compared to the second quarter results, but up $3 million when compared to the prior year period. Driving the increase when compared to the third quarter of 2009 are higher Global Index Group and European listing revenues.

And turning to Market Technology, revenue was $38 million for the quarter, up from $34 million in the second quarter and $36 million in the prior year quarter. Included in the third quarter of 2010 results of revenues associated with the SMARTS Group, which was acquired during the quarter. At quarter end, total order value, which represents the cumulative value of all fined orders that have not yet been realized into revenue was $446 million. And in an effort to improve our transparency, and consistent with what we started last quarter, Slide 13 of our earnings presentation contains a table that shows when we expect to recognize the current order value into revenues over the coming years.

And looking ahead within market technologies for the fourth quarter of 2010, assuming current FX rates, we expect our revenues to be approximately $43 million. Finally, in relation to our net revenues for the third quarter, FX had the overall impact of the increasing net revenues in the quarter by $5 million when compared to the second quarter, but decreasing revenues by $2 million when compared to the third quarter of 2009.

Now turning to expenses. Total non-GAAP operating expenses for the third quarter were $203 million, representing a decrease of $4 million from $207 million in the second quarter of 2010, and an increase of $6 million from $197 million in the third quarter 2009. The decrease in expenses when compared to the second quarter of 2010 is primarily driven by lower compensation, professional and contract services and computer operations and data communications expenses. Partially offsetting lower spending in the quarter is the impact of changes in the FX rates, which had the effect of increasing expenses by $3 million when compared to the second quarter of 2010, as well as additional expenses associated with SMART.

The increase in expenses from the third quarter of 2009 is primarily due to cost associated with SMART and increases in the compensation expense, offset somewhat by lower expenses related to the sale of Carpenter Moore, which occurred in the fourth quarter of 2009.

Looking forward for the full year of 2010, we are revising our guidance slightly, and we expect total expenses to be in the range of $880 million to $890 million. This guidance now includes expenses associated with SMARTS Group, as well as approximately $60 million of nonrecurring expenses. Excluding the nonrecurring expenses, we anticipate that our operating expenses will be in the range of $820 million to $830 million. Although a $10 million range in guidance is wider than usual deflate in the year, we believe that it's prudent due to the variability we're seeing in FX rates, specifically with respect to the Swedish krona. Results for the quarter yielded non-GAAP operating income of $169 million, with operating margins coming in at 45%, up from 44% in the prior year quarter. Net interest expense in the quarter was $23 million, a decrease of $1 million from the second quarter of 2010, and equal to the net interest expense realized in the third quarter of last year. And finally, on the income statement, the effective non-GAAP tax rate for the quarter was 32% within the range of our normalized tax rate of 32% to 34%.

Turning briefly to the balance sheet, cash and cash equivalents and financial investments at the quarter end were approximately $838 million. Of this amount, approximately $438 million is the reserve for regulatory requirements and other restricted purposes. During the quarter, we used $12 million for capital spending purposes and $100 million was used to buy back shares, bringing the total amount repurchased to $300 million since the share repurchase program was announced on March 2. To date, we have purchased 15.1 million shares, 5 million of which were acquired in the third quarter. Additionally, as a reflection of our ongoing commitment to return capital shareholders, we recently received board approval to increase the share repurchase program by another $150 million, bringing the total authorized amount to $550 million.

Because we've executed $300 million of the program to date, we currently have authorization to buy up to an additional $250 million of our shares in the coming months. Our current intent is to execute this program throughout 2011, depending on market conditions and absent other higher returns of strategic activities. We also used $70 million of cash in the quarter for debt repayment, including $35 million associated with the mandatory payment of our term loan and $35 million associated with an optional payment. This brings our year-to-date repayments to a total of $111 million. We ended the quarter with total debt obligations of $2 billion. We are very pleased with the results this quarter.

In addition to demonstrating our ability to innovate and execute our growth strategy, the results also highlights that expense management continues to be a core competency. When adjusting for expenses associated with the SMARTS acquisition, our spending in the third quarter of 2010 is on par with levels realized last year, while net revenues increased $23 million. Our ability to achieve operational efficiencies has allowed us to continue to invest in new initiatives, while expanding our profit margins. Thank you, and I will now turn the call back over to Vince.

Vince Palmiere

Thanks, Adena, and operator, we're ready for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Rick Repetto from Sandler O'Neill.

Richard Repetto - Sandler O`Neill

I guess the question is on the favorite topic with interest rates swap clearing. So a competitor announced that the launch of their platform had a number of the higher profile names, including Fannie and Freddie, as I guess supporters, how does that reflect? Are they still supporters? And could they still be, I guess, customers of the IDCG platform, or how should we think about that?

Robert Greifeld

Well, I would say this, Rich. I believe the participants in the market in both the buy and the sell side are interested in having more than one platform be viable for interest rate swaps. So we were pleased with our progress in the second quarter. As I said, we have gone live. We have trades going through the system. Our level of engagement with the, I would say, all aspects of the street has intensified during the third quarter. And as I said, we're pleased with the progress.

Richard Repetto - Sandler O`Neill

And I guess, one follow-up is what was the SMARTS' expense? I know you talked about $12 million to $13 million run rate, I think that's annual, but what was the SMARTS' expense in the quarter?

Adena Friedman

On the Investor Day, we did mention that we expected about $12 million to $13 million of expenses this year from SMART. We brought in SMART and we've recognized two months of revenues and expenses, and so the SMARTS' expenses were around $4.5 million for the quarter.

Richard Repetto - Sandler O`Neill

The very last thing, Bob, I know you said it's been a successful launch of the new price-size platform. But I was just a little bit -- the 30% increase in size is good, but I was actually expecting an even greater size, given that, that priority is based on size. Was that what you were modeling or sort of in your sites?

Robert Greifeld

Rich, I would agree with you. We want to go dramatically higher in the size, but as we went live, we expect that it would build. It would whack as higher, and people have to have increased confidence in the model. So it's in the range of what we expected, but the key point is we expect it to continue to increase. And I would say that we're working very aggressively at the buy side to ensure that they have true direct access to the market, and direct access, being defined where they can control the posting activity. So I think every week that goes by, we pick up one or two more buy side furniture capable of doing that. So we're making progress there. I'll go back to your second question, Rich, and that's on SMARTS. What is I think it's good for us in the first quarter and I know you can to the engineering, it was essentially flat to us and we expect the synergies will start coming in, in the fourth quarter. So I think that acquisition will be well within our guidelines for accretion within the first 12 months. And going back to your first question, I want to make it clear, that we certainly believe, and I think everybody in the industry believes, there'll be more than one competitor over the long-term for clearing of interest rate swaps.

Operator

Our next question comes from Dan Fannon from Jefferies.

Daniel Fannon - Jefferies & Company, Inc.

Can you talk about the U.S. cash equity business? I mean, you had a successful last 12 months kind of improving your net capture rate. The competitive environment looks to be a little bit more stable. Can you talk about your outlook there for any potential price changes? Actually maybe some improvements, if there are any, or if you think they just were in a stabilization period here for sometime?

Robert Greifeld

We're taking, I think, a quite innovative move that's effective November 1, with our pricing for U.S. cash equities. And it's the first time that I think the pricing, if targeted, to what I'll call the natural buyers or sellers, the natural providers of liquidity. And it operates on a theory that if we attract more the naturals, then others will follow. And I would say in discussions with our customers over the last week or so, it's been the strongest positive reaction we have received for any pricing action that I can remember. And we have four firms that are committed come Monday to provide, what I'll call significant incremental volume to the platform. So we're excited about that move.

Daniel Fannon - Jefferies & Company, Inc.

I guess on the Access Services or the Access revenues, can you give us a sense of kind of what's driving that? And if we can look at that as a growing component of your revenues, going forward, based on the levels we saw here in the third quarter?

Robert Greifeld

Well, it certainly has been a growing component over the last several quarters, and we expect that to continue. In the third quarter of 2010, the team did a very good job of introducing some of the products and/or services to that business, and that's helped grow it. Adena, you want to add anything?

Adena Friedman

And I would say that, certainly, the levels that we're seeing this quarter are in terms of the growth, that is a sustainable growth, it's not a sort of short-term type of thing. But it is definitely a nice growing part of our business, and it demonstrates the balance that we're continuing to achieve between the transactions revenues and the recurring revenues in the U.S. cash business.

Robert Greifeld

And it's becoming increasingly clear that we are the preferred data center hosting operation for the industry, and we are the beneficiary then of more of the activity in the industry, and that's certainly helping drive our financial results.

Operator

Our next question comes from the line of Alex Kramm with UBS.

Alex Kramm - UBS Investment Bank

I just wanted to get back to Rich's question from earlier on IDCG. And I don't want to harp on it too much, but you made this whole comment how you spent a lot of time talking to buy side, sell side, and then there's this need for more than one solution, which I totally get. But we've still spending the last two or three weeks talking to the buy side too. And quite frankly, when we gave them the choice of where they want to clear, it's the EMEA and LCH and well, you guys came up in discussions a couple of times, but it's rather from really large organizations that just went on half options. But we have talked to the guys that actually are active in the OTC markets, they always talk about you. So want to just kind of see where you are seeing the support coming from and who these guys are that you think will be clearing with you? Because we're quite frankly not seeing it.

Robert Greifeld

Obviously, we may be talking to different people, but I would say this, that our buy side support is coming from several larger players, who are I think in certain ways, the ax in this activity, who are committed to the platform, and they were comfortable where we are with them at this point in time. And as you saw during the quarter, the range of clearing of SGMs available has increased, and I would say that the size that they have in the balance sheet that affirms such as State Street and Bank of New York represent, clearly is a positive development for IDCG.

Alex Kramm - UBS Investment Bank

The European businesses are doing pretty well, so far, this quarter. And just wanted to get a sense if you put this more in the alpha or the beta category? Is this just markets over there or do you actually see proof that some of the new technology that you put on there is actually having an impact? Maybe you can give us an update in terms of high frequency participation and things like that?

Robert Greifeld

I would say for the quarter, obviously, was a combination of alpha versus beta. But in the quarter, I would say it was more beta that drilled the bigger dollar increases. But probably more importantly to us and each of the new initiatives we have, we saw a fairly dramatic on our progress sowed and I highlighted some of them in my talk. So I won't repeat that. But responding to your question with respect to high-frequency trading. First, in the U.S. and the equity market there, we saw notable increases we just received the co-location contract from a very large U.S.-based high-frequency firm yesterday. But it hasn't driven in the meaningful way the numbers that we think it will as we get into 2011. And with respect to our derivatives operation, I understand that we have proprietary product for equity index derivatives, of which we are also the clearing enterprise, and that represents a huge upside for us with respect to the advent of high-frequency trading coming into that marketplace people. And I would say that's lagging probably three months behind our efforts on equity side. So all good get things happening there, primarily driven by beta in the quarter, but enough significant alpha developments and it makes us optimistic for the results in 2011.

Operator

Our next question comes from Michael Carrier with Deutsche Bank.

Michael Carrier - Deutsche Bank AG

A couple of questions on pricing. It looks like in the U.S. and in Europe on the cash side, we were all prepared for some improvement whether on the FX side in Europe or some of the tiers that were hit last quarter. On the derivatives side, it looks like it was the opposite. It looks like there was a little bit more pressure both in the U.S. and Europe, even in new adjusting for the FX. So just trying to understand what was taking place in the quarter, whether it was customer mix, product mix on the derivative side.

Robert Greifeld

Well, I'll start with the U.S. side and our options business, clearly remarkable gaining share. Part of that share has to be attributed to pricing actions that we've taken which lowered cash, but overall, was a benefit for the organization. We also, as we've covered before, with the dividend recaptured trades, we have a lower cash rate for that. So I think the plan has gone as we foresaw it with respect to our options business, and we do appreciate the position it would gain as a result of that. With respect to the European derivatives business, we don't see any significant movement with respect to how we price the product. I would attribute more to just a quarter-to-quarter variation.

Michael Carrier - Deutsche Bank AG

On the tech line, you gave the expenses related to SMART, any color? Because I think just expectations were something like around the 32 level on the tech side, so obviously because it closed, the revenues came in sooner. But just sort of like the core number versus what SMART's at?

Adena Friedman

Sure. For the quarter, we had about $5 million and revenues coming from SMART. So core revenues for the quarter were 33.

Operator

Our next question comes from Niamh Alexander from KBW.

Niamh Alexander - Keefe, Bruyette, & Woods, Inc.

If I could go back, remember the Analyst Day, I think you'd mentioned that there might be a significant amount of your cash freed up from kind of being restricted for regular repurpose in the Nordic markets, has that been freed up right now, or when you talk about your cash sideline for regulatory, is there a scope for that to kind of go down from there?

Robert Greifeld

The answer is no, and the plan was more towards the balance towards the end of 2011.

Adena Friedman

Our plans are to introduce the default fund structure in the Nordic market. Today, we sell funds, the default funds, within the Nordic clearinghouse, and we're going out to a number of default fund in conjunction with some regulatory changes there. But we have to work with the members, and also with the regulators to implement that program. And as we mentioned that in the Analyst Day, we would expect that to be a benefit to us in late 2011, early 2012.

Niamh Alexander - Keefe, Bruyette, & Woods, Inc.

On all those cash you have that's free, I mean, are you seeing -- is it more of a buyer's market now in terms of maybe deploying some for acquisitions with ready sellers ahead of acquisitions or tax changes rather?

Robert Greifeld

Well, it's never as much of a buyers market as you'd like. But I would say that the market is pricing itself somewhat more realistically than what it was a year ago. So I think there's plenty of opportunity out there and certainly, something that we evaluate on a regular basis.

Niamh Alexander - Keefe, Bruyette, & Woods, Inc.

Is the pace of what you're looking at, not bankers bringing you ideas, but is the case of actually what maybe your taking a hard look at, is has that increased over the past quarter or so?

Robert Greifeld

I think that's a fair comment.

Niamh Alexander - Keefe, Bruyette, & Woods, Inc.

Could you give us an update on -- we're seeing a lot of different proposal and suggestions at the SEC working with various people in the industry, but some of the things we should just be watching at from kind of the risk to earnings, should it like co-location revenues, or should it be like if the SEC wants to attach some obligations to the high-frequency community, how should we kind of think about which risks to monitor?

Robert Greifeld

Well, the first thing I would say is, I asked a report that was released the last several days is interesting, and I certainly think it represents a opportunity for exchanges and it represents the collective view of the securities regulators across the planet. So it direct you to that. So if we look at pending regulatory changes, we certainly see, I think, more opportunity than downside. With respect to obligations on market participants, we think that would be a relative positive to us as a primary market if that was to come about. And if I was to predict anything, I certainly don't think something would happen in 2011, and I think it's a very difficult road to try to properly define what responsibilities and the corresponding privileges you'll give to market participants, and to the extent the regulators wanted to get on that sort of result. It's hard, hard thing to come to conclusion on.

Niamh Alexander - Keefe, Bruyette, & Woods, Inc.

So you're not anticipating significant changes in the next 12 months, I think?

Robert Greifeld

No, and you have to realize the aspect the fact that the commission has a fair bit of work with respect to Dodd-Frank, and there's legislatively mandated time of certain outcomes that they have to come to. So you have that reality to deal with. The other thing I'll say on the regulatory side and ties back to your earlier question is with respect to our Nordic clearinghouse, we see in Europe a clear direction from the EU and some of it, they want clearinghouse is to have member guarantee funds. So we are working with our members today. They're being quite, I think cooperative, but you also do have the looming fact that this will become probably the rule of the land, and that clearly represents an opportunity for us to free up substantial capital, probably in 12 months.

Operator

Our next question comes from Daniel Harris from Goldman Sachs.

Daniel Harris - Goldman Sachs Group Inc.

I wanted to turn to some of your other new initiatives, specifically here in the U.S., the NOCC. I know you talked about starting to see some longer duration contracts. And I was just wondering, can you sort of put some color around who are your, without obviously, calling the names, but what types of companies are your core clients here, and how do you see that potentially growing over the next few years?

Robert Greifeld

So importantly, a longer duration and higher value contracts. And so we processed the trade just last week, where the initial fee to us was around 17,000, and through the duration, as you probably know, there's 25,000 on top of that. Obviously, those trades have been few and far between, but the fact is that we have increased confidence from the community. And the community that we deal with right now are what I'll call the naturals. So we don't have so much the intermediaries in the space, and we certainly want them to come into the space, and that will help liquefy the market. But it's primarily the fundamental players in the market who are our customers right now.

Daniel Harris - Goldman Sachs Group Inc.

And sticking on IDCGs, while you talked about having some volume there during the quarter and open interest at the end of the quarter, was there any revenue, and how should we think about that in the short-term ideas that de minimus, or should it be something that we should start modeling in?

Robert Greifeld

I would say right now, it is de minimis. We have revenue. We're happy to have revenue, and it certainly cuts down on the burn rate, but it's nothing that you need to model at this point in time.

Daniel Harris - Goldman Sachs Group Inc.

Going back to Access Services, I hear that the demand for your product is growing. I was a little bit surprised that the pace of growth this quarter, and Adena, I think you said that, that level are sustainable, but was this just a number of new clients with this cross-selling more products there, and was anything in here via Europe?

Adena Friedman

There's not a lot of revenue coming from Europe yet. As Bob mentioned, we are setting up firms and the Access Services revenue does include some European revenue, and we do expect that to grow as the high frequency firms do unto the European market, but it's not a substantial part of the revenues today. I would say that the revenue growth in the third quarter is sustainable, because we have essentially new services we're offering, cross-selling of other services. And remember, this also includes membership fees and other monthly fees that go along with accessing our market in addition to actual lines coming in as well. So it's just a combination of things this quarter that has resulted in that growth and we're very pleased with it.

Operator

Our next question comes from Roger Freeman from Barclays Capital.

Roger Freeman - Barclays Capital

I guess first on the repurchases, so I didn't know you mentioned any expectation around $100 million in the fourth quarter. Adena, I think you talked about that in the analyst day, and I'm not sure if that's changed. And also with respect to repurchases, I'm wondering sort of what the logic is in doing sort of the small increases to the authorization to those maybe something larger and just recording progress against it?

Adena Friedman

Well, we do anticipate continue to execute the program this quarter. And as we said at the Analyst Day, we could see ourselves taking in as much as $100 million this quarter. Obviously, depending on market conditions and other things like that, and then the $150 million authorization that we received from the board, really, is to carry us into and through next year, and it is supposed to be a part of our ongoing program that works or develop around us.

Patrick O'Shaughnessy - Raymond James & Associates

The backlog in the Technology business, I guess, it looks like, if I got this right, 2011 came up a couple of million bucks, maybe through over $5 million, if overall, it looks like no size of the wins in the quarter. It's only in the second quarter you kind of given this date out, so just kind of what to think about what to expect in that quarterly. Do you frequently have quarters were there's nothing or is there seasonality where it tends to be weighted, and approximately, when that builds?

Adena Friedman

First of all, the sales cycle in the Market Technology business is long. And then for us, we've had, I think, a very, very good success in essentially signing on some very large contracts in quick succession. But then you can have carriers where it takes sometime to develop the relationship and in time, further contracts. So it's going to be, as we've said before, it's kind of being lumpy that way. But obviously, the GAAP recognition of revenues smooth some of that lumpiness out overtime, and that what we're showing revenue recognition table. So the other thing I would say is the third quarter is always our quietest quarter, because of the fact that people are on vacation, people are out of the office, and you don't tend to make as many sales during this quarter, nor as many deliveries or enhancements, so it does tend to be our quietest quarter. But having said that, sales again, it's a long sales cycle, so you shouldn't expect big wins every quarter or anything like that.

Robert Greifeld

You'll see the orders will be episodic and lumpy, but the revenue will be quite smooth based upon U.S. GAAP.

Roger Freeman - Barclays Capital

And just also on Singapore and Australia, both customers of yours, any thoughts preliminarily on the mergers and opportunity or risk?

Robert Greifeld

It's an opportunity, and we signed contracts with them recently, and I think, the credit to our team in the contracts, it was not a shock that this kind of deal would happen. So I think it represents a good opportunity for us. And clearly, these markets will want to be tied together, and we can help them do that in some fundamental way.

Celeste Brown - Morgan Stanley

On tape revenues, U.S, I think, was down I think 7% and your markets are overall was flattish, I think, down like 30 basis points, maybe a disconnect there. I know there's issues around quoting sometimes that affect that? Anything you can point to how that work against this quarter?

Robert Greifeld

Roger, before you get to that, I'd like to backup to the Singapore question, what's interesting is I happen to be in Singapore for announcement of our ability to essentially trade some of our listed stocks in the Singapore Market. And as much as I've criticized, what I call, meaningless MOUs [memorandum of understanding] between exchanges, this is getting to be a real operational connectivity between exchanges that will work. We have the clearing infrastructure in place between DTCC and the Singapore clearinghouse, and we have a number of our leading Chinese listed companies, which has a strong interest in that region to trade available to this. I think that's a great progress and certainly, indicative of the type of relationships we'd like to have with exchanges going forward.

Adena Friedman

On the tape revenue, Roger, first of all, there was somewhat of a decrease in the macro revenue, the overall gross revenue that we get from the tape plans. And that generally was the result of some softer demand on the retail side, which generally corresponds to the summer. But also as a general matter, data revenue is a lagging indicator. So you tend to find that we're still kind of moving our way out of some of the disruption that's occurred in the financial market. So the growth revenue came down in the quarter, and then in terms of the net revenue take, you're right that there is a little bit of a disconnect, and it's because of that code-sharing elements to the tape sharing plan, as well as depending on where you're strong in market shares, some of the tapes are richer than others. So you can -- if you have more revenue coming from richer tape, they you tend to have an elevated amount of revenue in relation to your market share and vice versa. It's more of your marketshare is coming from some of the tapes that spread the revenue out more. So it's hard to calculate. But you're right that there was a little bit of a disconnect between market share and our tape share.

Operator

Our next question comes from the line of Howard Chen with Credit Suisse.

Howard Chen - Crédit Suisse AG

Well, Bob, in the U.S. Options business, I know your goal has been to maximize profit, and not necessarily market share. Market share is growing, but looking back, it looks like the net revenue capture is tracking down 20% from year-ago levels. Do you think you've achieved that right balance and maybe if not, what needs to change for you to get that balance right?

Robert Greifeld

Well, I would say this. We've got an incredibly capable team running the Options business, and there's a number of innovations that they have been really anxious to bring to market. And I've mentioned something before primarily around complex orders, and we're getting close to where we have both regulatory approval, and the technical capability to do that. And I think as we launched those products, it certainly will help with the capture rate. But going back to your opening comment, our goal is certainly to maximize profitability, but it's never 100% one way or the other. So clearly, there's been a marketshare element in our actions in the last year, and we think we've achieved the right balance.

Howard Chen - Crédit Suisse AG

Switching over to Market Technology, could you give us a feel for where the margins are? I know that 25% to 30% goal is more of a year end 2012, but just kind of current state of play would be helpful.

Robert Greifeld

I would say that the progress on the margins for Market Technology is reaching our level of satisfaction. I wouldn't say we're overjoyed with, but we're pleased with the progress, and it's a work in progress.

Adena Friedman

And Howard, we do publish that in our Q, so you'll see that next week. But it is in double digits right now in terms of profitability.

Howard Chen - Crédit Suisse AG

And then just quick one on the numbers, Adena and the period share count, if we could trouble you for that?

Adena Friedman

201.

Operator

Our next question comes from the line of Chris Allen with Ticonderoga.

Christopher Allen - Ticonderoga Securities LLC

Just quick numbers question, what should we be using for the tax rate moving forward?

Adena Friedman

And the reason why the tax rate came down a bit this quarter is because on our relative basis, more of our revenue is coming from outside the U.S. So our European operation was the strongest quarter and with the lower volumes in the U.S. on a relative basis, it came in higher for our overall business mix, which then brings the overall tax rate down. So that's why you have the drop in tax rate from the second quarter to the third quarter. On a going forward basis, I would say that we're looking at the tax rate of 32.5% to 33%. And it's assuming that the business mix stays relatively consistent with what we've seen in over the last few quarters.

Christopher Allen - Ticonderoga Securities LLC

On foot 14, you talked about the $80 million to $85 million incremental revenue from the investment spending that you've done in 2010, I mean, can you give us some color in terms of where you stand relative to that goal, what's been the progress over the course of the year?

Adena Friedman

Sure. Well, we update that every quarter, so we obviously feel pretty good about that number, because we just updated it. And we also -- I don't know if you got this, but the cost associated with our new initiatives came down from the prior quarters version of that slide. So we are again really managing our expenses very well against this new initiatives, and we do feel comfortable with the brains that we've got in there for the $80 million $85 million of revenues for the year. And our progress is good. I think that you recognize that some of those initiatives were launched in 2009, and they obviously have more progress against them. And others were launched in 2010, and we do hope that they bring out some revenue into 2011 and 2012.

Robert Greifeld

I would just say that we're increasingly bullish on the investments that we made. We know that not everyone of them will pay off, otherwise it would be a guarantee. But clearly, there's been noticeable progress we've referenced to a number the items already during the call. But getting first dollar revenue on these new initiatives is an important milestone, and we achieved that in numerous ways in the third quarter of 2010.

Christopher Allen - Ticonderoga Securities LLC

Bob, obviously, the Singapore, Australian announcement, sort of a chatter on the next potential wave of M&A among the exchanges. How do you think this plays out over the next couple of years from your perspective?

Robert Greifeld

Well, I think with the Singapore, Australian announcement, you see both the positive and negative. Clearly, there's some compelling commercial logic behind that transaction, but there's also a political aspect through the transaction. So I've said something preciously that I think at the end of the day, there'll be one exchange, and that's obviously not going to happen. But when you're in the transaction processing business and you can lever a fixed cost platform, that creates some compelling commercial logic. So that's the basic backdrop to our industry, it's been there forever. Since the market's in electronic and we'll always be there, but as we said, these initiatives, these acquisitions, it has to represent everything lining up in a perfect way for you to want to do them, and that's a difficult set of circumstances to forecast.

Operator

Our next question comes from the line of Matthew Heinz with Stifel, Nicolaus.

Matthew Heinz - Jefferies & Company

I think in the last few years, we've all been harshly reminded of the cyclicality with respect to the cash equity business, and it appears that we bounced off the bottom in terms of the competitive cycle, but I'd be curious to hear your thoughts on where you think we sit in the volume cycle just from a historical context kind of perspective.

Robert Greifeld

I certainly believe from a historical context that we have studied this, and we have made reference to it during the Investor Day, we're near the bottom of the cycle, and when you recognize that living through net equity outflows, when the competition for that investment dollar, the fixed income market is basically paying zero. And in the case of tips in the last option, less than zero, you know that times will get better. So Equities at this of time are not en vogue. Clearly, when people seek higher returns, equities will, I think, regain some of its luster. And so we're living through somewhat of the bottom of the cycle and as I said in my comments, I think that makes this quarter that much more impressive for us to deliver $0.50 in a slow summer month when equities are at the bottom of the cycle.

Matthew Heinz - Jefferies & Company

As then as a follow-up, you've clearly been very aggressive with the trading capital from the last several months and becoming even more so, but at what kind of levels in your stock do you think that the value proposition might shift in favor of doing more acquisitions or some other type of investments?

Robert Greifeld

Well, that's an answer that shifts based upon the particular opportunity. Clearly, with SMARTS, we saw a clear return higher than the share buyback, and we spent the $75 million in cash there as opposed to increasing the buyback. So I think we have the right disciplines in place. And I said, with acquisitions, we now have three pillars, one, that's to accrete within 12 months. Two, it has to be strategically seated at the game. And three, it has to provide a better return than the share buyback. So it's a great way for us to operate the business, and we look at everything through that prism.

Operator

Our next question comes from Mike Vinciquerra from BMO capital Markets.

Michael Vinciquerra - BMO Capital Markets U.S.

One question on the options side, I thought it's interesting as you again share, we've noticed that NOM has actually picked up significant share and if I'm doing the numbers right, you're at an all-time high in kind of a three-month rolling basis, anything particular to NOM that is helping to drive more activity there?

Robert Greifeld

One, in terms of -- we think NOM's best days are ahead of us. As I think I referenced in the last call at the Analyst Day, we are going to convert the NOM and Philly [Philadelphia] platform to be essentially identical and the important part there is when you look at NOM today, it has, obviously, a large membership base that are committed to the platform, but it still does not connect into the entire options marketplace. So if you make this move, then we'll be able to benefit from the fact that the Philly platform is completely connected into the options well. So we have a number of players who want to be in NOM that we're going to make it very easy for them as we go into 2011. But as you look at going back to directly to your question, as you look at the fact that we have the options trading in pennies today, it certainly makes the NOM market level that much more attractive to a larger number of players, and I think that's been the fundamental driver of our success.

Michael Vinciquerra - BMO Capital Markets U.S.

Can you share the net take between NASDAQ versus [indiscernible] is there a much of a difference between the two platforms from your perspective?

Adena Friedman

No, there isn't actually. I think that they've converged well, and so there's not a significant difference.

Operator

Our next question comes from Mark Lane with William Blair.

Mark Lane - William Blair & Company L.L.C.

So Adena, just to be clear on the capital management, so the share repurchase authorization expansion, is that meant to send a message that, that's what your intention is, the willingness of your commitment to share repurchase for next year?

Adena Friedman

Certainly, we do want to indicate that there's an ongoing element to the repurchase programs that we're introducing into 2011. And again, we'll look at market conditions. We look at all of the uses of our cash, but assuming that this is the right return for us, then we will continue to use that cash into 2011.

Robert Greifeld

And I think it ties back to an earlier question. Our board has chosen to look at this on a continuous basis. It will be a topic at every board meeting. So we're not out there saying here's the extent of the program that we'll then decrement against. So this is what we're entirely comfortable with doing, as you're probably going to see from our past actions. So we announced the share buyback, we kind of mean it, that they will actually do it and then we'll -- the board will take it as it comes or review the set of circumstances that exist quarter by quarter.

Justin Schack - Rosenblatt Securities

Really quickly on IDCG and the pricing, you were thrown out some pricing a few quarters ago very early when you look at the competitive landscape of the three players in the market, one is sort of the utility. The second one is not saying anything about pricing. They're negotiating with the dealers on the revenue sharing arrangements, et cetera, not a lot of detail there. Do you really feel like the pricing structure that you laid out is still relevant? Have you tried to garner attention for IDCG?

Robert Greifeld

Definitely. But I would put one qualifier on that. I think with respect to pricing, you'll see some preferred pricing for a filing on a group of members for a period of time, but the basic pricing model that was outlined, we feel comfortable with.

Operator

Our next question comes from Ed Ditmire with Macquarie.

Edward Ditmire - Macquarie Research

Since this is your first time really buying back shares in 2010, can you give us any color on your price sensitivity on your buyback decision? Of course, the stock price is considerably higher now than you started the program. Just try to give us a sense of when you guys might feel that the price is too high?

Adena Friedman

Well, I can say that since we started buying back shares back in March, we have achieved a very good average price. I think that average price of the buyback has been $19.95, of the 309 that we bought so far. And we do obviously look at the prices and element of making our buying decision, but we don't publish any sort of criteria around that.

Robert Greifeld

And I think the way to think about is how we look at acquisitions. So to the extent our stock goes higher, then other uses of the cash become that much more attractive. So it's really netting different alternatives together, as opposed to saying, okay, this price is too high or too low.

Edward Ditmire - Macquarie Research

Can you just maybe give us a hand, are we anywhere you're been close to the lines where different alternatives become more attractive? You guys are firmly the cheapest among all publicly listed exchanges in the world.

Robert Greifeld

It obviously makes it harder for us to do an acquisition with our stock being lower, that's for sure. And it makes it easier for us to want to buy back shares and I think we can probably leave it at that.

Edward Ditmire - Macquarie Research

Again to the Hong Kong ASX, on the one hand that I think that having companies that are -- I'm sorry, between Hong Kong and then Singapore ASX potential tie up, you have some customers in Market Technology that are just getting bigger and bigger from a market cap prospective. These guys are firmly in that top tier of global exchanges now. And I'm kind of thinking about on the one hand, as your technology business becoming more valuable as these customers are taking a bigger place in the world stage or on the other hand, our company is like these? Do you think are they comfortable on not controlling their technology?

Robert Greifeld

Well, you referenced the two exchanges that have signed up major long-term agreements with us. And in particular, with Genium INET, so I think those drags speak for themselves. Again, our technology is unparalleled on a global basis right now. We're not only incredibly proud of the speed and the throughput, but the application capabilities is absolutely outstanding, not with these products. And Genium was built off of the CLICK platform, and CLICK has been renowned through the industry for several decades now with the ability to configure it, the process and trade, any asset that you could think of. So you combined that with the power and the speed and the capacity of the INET messaging bus, you truly have something that's very difficult to replicate.

Adena Friedman

Also, I'd say that in terms of the relationships we have with exchanges like Singapore Australia, as Bob mentioned, we did just sign-up long-term agreements. But also with the announcement we made with Singapore, the relationship with these exchanges goes beyond just straight technology as well. So they are looking at this increasingly as a partner like we've done with this dual listing initiative. And as they increase their importance in the global stage, they also are looking at how to partner with other global markets, and we're an obvious choice for them since we have a common technology.

Robert Greifeld

I think that's a great point, and clearly, that's part of the future of the technology business to be a partner. And with our relationships with Singapore, you can see that we're taking a lead in that area.

Operator

Our next question comes from Chris Harris from Wells Fargo Securities.

Christopher Harris - Wells Fargo Securities, LLC

Looking at your cash equities business again here, it looks like your market share might be under a little bit of pressure here so far in October. And I was just wondering if you'd comment, really, what's been driving that, and whether this new pricing modifications in November 1st is an attempt to kind of maybe -- I guess, how about the share there in the Cash Equities business?

Robert Greifeld

Two responses. One in times of the lower volatility, the rate of internalization increases, and we certainly have seen the mix decline, so that's a real-life factor. Two, our pricing actions on Monday, we certainly expect that it will help us gain share. And as I've said, its pricing actions targeted to the naturals in the marketplace, and we have a basic belief that, that has a ripple effect in terms of activity in the liquidity pool. So we're very optimistic about that.

Christopher Harris - Wells Fargo Securities, LLC

And then on IDCG, would you guys ever consider selling a portion of your interest in that and, to bring another partner in or another exchange perhaps, or is this something that you're maybe 100% committed to?

Robert Greifeld

One, we're 100% committed to it, but that doesn't preclude other options or other partners. We certainly don't see it likely that we would sell equity to another exchange rate now, but there are other people that it could make sense to. And hopefully, as you follow us all the time, you see that we take pride in being a flexible mind, and we're open to whatever will make sense at the end of the day.

Operator

Our next question comes from Jonathan Casteleyn with Susquehanna.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

You've talk about it broadly in some of your prior comments, because I'm just wondering, is there any way to characterize the regulatory view on higher frequency trading, especially in light of the recent flash crash report, anyway to kind of -- some of their view up on the practice?

Robert Greifeld

Well, it's hard for me to speak for the regulator, and it would probably be foolish for me to try to. But I think the flash crash report showed that there are many different factors that go into our U.S. equity market structure. And clearly, higher frequency trading which were for the report was assumed to be a culprit. It came out of that report relatively unscathed. So I would say it's hard to draw at any conclusion from that except that we should take pride in the fact that we have taken steps. I call them blunt instrument steps, one with respective circuit breaker to their proposal for stub quotes. I think this active discussion about limit up, limit down, replacing circuit breakers, we support that as a better way to go. And that kind of puts in the basic controls in the market, then the longer discussion will be how do you put it to find their influence of control on the market. And as I said, those kind of discussions are competing with many other initiatives inclusive of the Dodd-Frank regulatory bill.

Christopher Harris - Wells Fargo Securities, LLC

Well, from that perspective, do you think the bulk of the worker has been done or have they satisfy some of the questions raised by that incident?

Robert Greifeld

Well, I think they have satisfied as I said, the macro questions. When you think about a circuit breaker, you're saying, okay, if something happens in the market that we don't necessarily like, we're going to shut the market down, and so you take yourself out of that risk profile. But then the second order question, is that the best way to do it, and is that the best market structure in placed, and how do we get to a point in time where we don't have to shut the market down. From our point of view, having to shut the market down is somewhat the mission of failure. And so the more granular questions is how do you create a market structure where you don't have to hit a circuit breaker or have to hit a limit up, limit down. And that's going to be a longer route as we discuss how to get there, and a part of that discussion will be about privileges and responsibilities for certain market participants. And as we know from class markets where they were privileges that bad things can happen to markets. So it's a very nuanced discussion, and I think that it will take a period of time.

Christopher Brendler - Stifel, Nicolaus & Co., Inc.

To Genium INET, the exporting of the platform into Nordic derivative, at status quo volume, is there a benefit there?

Robert Greifeld

There will be from an expense side, and that benefit is not today. But as we move the fixed income operation onto Genium INET, then we'll have another platform retirement, and that will be the FactSet platform, so we're not quite there yet. We took the a major step, but we do have to migrate the fixed-income market over to it.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

Is it substantial savings or how do characterize the savings?

Robert Greifeld

Well, we haven't put a number out there yet. And I'm not prepared to answer unless I'm looking at Adena here.

Adena Friedman

Well, I think that our Market Technology group and particularly, our IT ops group continues to find ways to become more efficient. And you do see that in our expenses in terms of our ongoing expenses continue to -- we strive to bring this down, and this will obviously help that and probably later in 2011. But it won't be anything dramatic. I think it will be to a part of our efficiency program.

Robert Greifeld

It's always a good thing to retire a platform. We are anxious to do it, and the savings tend to be larger than you think when you find an elimination of x amount of work that is their. So it will be a positive thing. It will come sometime in 2011, but it's hard for us to put an exact number on it right now.

Operator

And our final question comes from Rob Rutschow with CLSA.

Rob Rutschow - Credit Agricole Securities (USA) Inc.

Just a quick question one on the Nordic markets, you went to essential counter party clearing, but the revenues have been relatively flat. Is there anything going on there that's not readily apparent in the numbers? And do you new brokers that are looking to sign up for those markets?

Robert Greifeld

Yes, I mean, I'm speaking plainly. I think our expectation was for the new entrants to be productive in the marketplace would've happened sooner. So that's somewhat the bad news. The good news is they're all engaged. The pace of activity has picked up. And in a certain way we think the end state is better than we would've thought a year ago. As I mentioned previously, it was the very largest high-frequency firms, which has been testing the models against the Nordic market, or their colo equipment signed a contract for the colo just yesterday, and we hope to have them operational sometime in the first quarter. So we're making progress. It's just a little slower than we thought, but I think the open opportunity is actually larger.

Operator

At this time, I'd like to turn this over to our speakers for any closing remarks.

Robert Greifeld

Well, I would say, thank you for your time today. As I've said in my prepared remarks, we're quite proud of the fact that against what we call a beta headwind, we were able to deliver alpha results to our investors, and look forward to talking to you next quarter.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone, have a great day.

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