The following discussion should be read in conjunction with our condensed consolidated financial statements for the period ended March 31, 2009 included herein in Item 1, and for the year ended December 31, 2008, included in our Annual Report on Form 10-K for the year ended December 31, 2008.

Amounts in the tables, including footnotes to the tables, are shown in thousands, except per share data.

Overview

We are a leading global provider of financial market data, analytics and related solutions to financial institutions, active traders and individual investors. Our customers use our offerings to support their portfolio management and valuation, research and analysis, trading, sales and marketing, and client service activities. We market and license our services either by direct subscriptions or through third-party business alliances.

Our offerings are developed and delivered to customers through four businesses that comprise our two reportable operating segments: Institutional Services and Active Trader Services.

Institutional Services

Our Institutional Services segment primarily targets financial institutions such as banks, brokerage firms, mutual fund companies, hedge funds, insurance companies and money management firms. In addition, our Institutional Services segment markets its offerings to financial information providers, information media companies, third-party redistributors and outsourcing organizations such as service bureaus and custodian banks. The Institutional Services segment is composed of three businesses:

• Interactive Data Pricing and Reference Data. Our Pricing and Reference Data business provides financial institutions, third-party redistributors and outsourcing organizations with intraday, end-of-day and historical pricing, evaluations and reference data for an extensive range of securities, commodities, and derivative instruments that are traded around the world.

• Interactive Data Real-Time Services. Our Real-Time Services business provides financial institutions, financial information providers and information media companies with global real-time and delayed financial market information covering equities, derivative instruments, futures, fixed income securities and foreign exchange. Our Real-Time Services business also includes our Interactive Data Managed Solutions business, which offers customized web-based financial market information solutions.

• Interactive Data Fixed Income Analytics. Our Fixed Income Analytics business provides financial institutions with sophisticated fixed income analytics designed to help manage risks and measure the performance of diversified portfolios.

Active Trader Services

Our Active Trader Services segment targets active traders, individual investors and investment community professionals. We consider active traders to be investors who typically make their own investment decisions, trade frequently through online brokerage accounts and seek to earn a substantial portion of their income from trading. The Active Trader Services segment is composed of the following business:

• eSignal. Our eSignal business provides active traders, individual investors and investment community professionals with real-time financial market information and access to decision-support tools through a wide range of desktop solutions to assist in their analysis of securities traded on all major markets worldwide. eSignal also operates financial websites that provide investors with free financial information and news about global equities, options, futures and other securities.

Corporate and Unallocated

Our Corporate and Unallocated costs include expenses related to corporate, general and administrative activities in the US and the UK, stock-based compensation, costs associated with our Boxborough data center, and intangible asset amortization.

Business Strategy

We are focused on expanding our position as a leading provider of financial market data, analytics and related solutions to financial institutions, active traders and individual investors. A key element of our strategy involves working closely with our largest direct institutional customers and redistributors to better understand and address their current and future financial market data needs. By better understanding customer needs, we believe we can develop enhancements to existing services and introduce new services that offer new or improved features, content or capabilities that will appeal to current and prospective customers. As part of our efforts

to build strong customer relationships, we continue to dedicate significant resources to providing high-quality, responsive customer support and service. We believe that our combination of strong account management and responsive customer support has contributed to our high customer retention rates within our Institutional Services segment, as well as enhanced our ability to attract new customers.

We continue to centralize key areas of our organization from a business and product strategy, sales management and operational perspective. We have made substantial progress in this area over the past several years and we believe these actions have, and will continue to, enable us to present our business more effectively to the marketplace. In addition, we believe these actions will help us address our institutional customers' needs by leveraging our collective content, capabilities and other resources across six core product areas:
evaluations, reference data, real-time datafeed services, web-based solutions (referred to historically as managed solutions), fixed income analytics and desktop solutions.

We plan to continue to invest in organic growth initiatives and pursuing strategic acquisitions that will enable us to expand our business globally. More specifically, we will continue to focus on developing and delivering high-value services through new and enhanced offerings. These efforts are based, in part, on an active dialogue with customers, prospects, business partners, industry organizations and other key parties. Our development initiatives are oriented toward helping our customers address powerful trends affecting their businesses such as heightened scrutiny on their valuation processes, increased regulation, the proliferation of automated trading systems and the need to differentiate their wealth management platforms. For example, in April 2009, we introduced a Business Entity Service to help assist clients in analyzing risk from their global exposure to various entities, industries and regions. This service is also designed to help meet clients' requirements for compliance under a variety of industry regulations such as Basel II, UCITS III, the EU Third Money Laundering Directive, MiFID, and the USA PATRIOT Act. The service complements an existing service for business entity data that Interactive Data launched in Europe in 2006.

We also will continue to invest in growing our business outside of North America, both organically and through acquisitions. We believe that continental Europe represents an attractive opportunity for expansion and can complement the strong relationships we have maintained with customers based in the United Kingdom. We believe that our August 2008 acquisition of Kler's, which is based in Rome, Italy, and our December 2008 acquisition of a majority interest in NDF, which is based in Tokyo, Japan, will enhance our ability to further expand our business outside of North America. In addition, in early 2009, we took steps to align leadership of our international business under a single management structure in order to more effectively and efficiently allocate our resources outside of North America with a focus on gaining greater scale and accelerating our progress in the Asia Pacific region.

Optimizing our technical infrastructure represents another key element in our strategy. Our technology infrastructure and operations support both the Institutional Services and Active Trader Services segments of our business and are designed to facilitate the reliable and efficient processing and delivery of data to our customers. We have implemented, and will continue to implement, initiatives aimed at optimizing our technical infrastructure by taking advantage of existing resources residing across our global organization. By doing so, we believe we can enhance our ability to meet the data delivery needs of our customers while improving our operational efficiency.

Historically, our business has generated a high level of recurring revenue and cash flow from operations. We typically have invested our financial resources in organic growth initiatives and strategic acquisitions while maintaining a conservative capital structure. We also have used cash to repurchase our common stock and returned cash to stockholders through dividends at levels and junctures as our Board of Directors believes appropriate. For additional information pertaining to dividend activity during the three months ended March 31, 2009, please refer to the discussion of our financing activities appearing below in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Business and Market Trends

The global financial markets have experienced extreme volatility and disruption for more than a year. This volatility has reached unprecedented levels as a result of the global financial crisis affecting the banking system and participants in the financial markets. This global financial crisis impacted operational spending by financial institutions during the second half of 2008 and in the first quarter of 2009. We expect global financial conditions will continue to influence overall spending on market data and related solutions for at least the remainder of 2009.

The global financial crisis has resulted in consolidation among some participants in the financial markets and the collapse of others, and has prompted substantial government intervention in the financial services industry. As a result, it is expected that there will be significant new regulation and government oversight of the financial services industry. Concerns over the tightening of all credit markets, inflation, energy costs and the dislocation of the residential real estate and mortgage markets have also contributed to the volatility in the financial markets and, together with the financial crisis, have diminished expectations for economic conditions in the foreseeable future. It is unclear at this time how potential new regulation and government oversight will affect our business in the future.

When financial institutions consolidate, they frequently look to gain synergies by combining their operations, including the elimination of redundant data sources. We continue to deliver services to a number of customers currently involved in the process of a merger or acquisition. If our services are eliminated or reduced as a result of consolidation, there is generally a lag between the completion of the customer's consolidation activity and its impact on our revenue. It is unclear at this time how the affected firms plan to integrate their operations and what impact, if any, those plans will have on the demand for our services. Additional financial institution failures or additional consolidation activity has the potential to adversely impact our revenue in the future.

We expect to continue to encounter uncertain market conditions in 2009. We believe that customers are intensifying their focus on containing or reducing costs while adapting to industry trends affecting their businesses, some of which may require additional market data or related services. It is likely that recent events in the global financial markets will reduce overall spending by institutions on financial market data and related solutions in 2009, although the overall magnitude of any such reductions is unclear at this time. It is also unclear at this time as to which segments of the financial market data industry will be most affected by future reductions in spending. Further, it continues to remain unclear what impact, if any, of the overall reduction in spending will have on our near term and longer term financial results. The major trends influencing our institutional business are further described below.

Institutional Services

Within the Institutional Services segment, overall annual retention rates for our institutionally oriented services were approximately 93% during the first quarter of 2009, which is below the 95% level we've reported in each quarter for the past several years. We measure our retention rates by the number of institutionally oriented accounts we retain in any given 12-month period. A single institutional customer may have (and often does have) more than one account. This metric does not measure revenue associated with any retained or cancelled account. The decline in our retention rates is attributable to a combination of institutional customer consolidations and our institutional customers' increased focus on reducing or containing costs.

We believe that much of the data we supply is mission critical to our customers' operations regardless of market conditions; however, we are affected, at least in part, by the recently intensified focus on cost reduction or containment within our institutional customer base. If the data we provide were not mission critical, we believe that current market conditions would affect us more adversely. In addition, as further described below, the current economic climate and global financial crisis also presents certain opportunities for us that may ameliorate the adverse impact the focus on cost cutting may have on our revenue.

The following are among the major trends influencing our institutional businesses:

• There has been and continues to be an industry trend (primarily in North America) for major financial institutions to outsource their back-office operations to service bureaus and custodian banks. We have established relationships with, and are a major data supplier to, many service bureaus and custodian banks. If an existing customer elects to terminate direct services from us because of a decision to outsource its back-office operations to a service bureau or custodian bank, we often continue to supply our data indirectly through our relationships with these institutions. In such cases, the revenue we earn per customer may be less than what we would earn if the customer obtained the data from us directly, although the costs associated with delivering and supporting the data indirectly may also be less.

• Over the past decade, there has been a consolidation of financial institutions both within and across the financial services industry. As discussed above, deteriorating conditions in the financial markets led to significant consolidation activity among financial institutions in the fall of 2008. Consolidations can lead to the elimination of redundant data sources at the combined entity. Consequently, consolidation activity has the potential to adversely impact our future revenue.

• As mentioned above, the global financial crisis is expected to adversely impact spending on market data and related services in 2009 as financial institutions focus on containing or reducing their costs. This focus may lead to the redirection of spending into areas where our financial market data services and related solutions can help them increase the efficiency of their workflows and related processing functions. At the same time, this focus may also lead to longer sales cycles, and increased cancellations and service downgrades over a protracted period of time. The levels of cancellations we experienced in the first quarter 2009 were higher on both a period to period basis as well as on a sequential basis over the rates we experienced in the last half of 2008. The impact of cancellations on our revenue may be delayed due to the lag between receipt of notice of cancellations and the related effective date of the termination. Heightened attention by financial institutions on containing or reducing their spending on the market data and related solutions that we provide to them over the coming quarters as well as the impact of cancellation notices we received in the first quarter of 2009, has the potential to adversely impact our future revenue.

• Increased regulation within the global financial services industry continues to influence the ways in which financial institutions utilize financial market data. We believe that the use of real-time, intraday, end-of-day and historical financial market data from independent third-party providers like us will be increasingly important as firms seek to modify existing practices to effectively and efficiently address their increasing regulatory compliance obligations.

• Financial institutions are creating automated algorithmic and electronic trading applications to efficiently execute their trading strategies. In order to rapidly execute their trading strategies, these applications require real-time market data with minimal latency. In addition, the trend toward algorithmic and other electronic trading programs is contributing to significant growth in market data volumes, thereby requiring both market data suppliers like us and the financial institutions themselves to increase network capacity to address these volume issues.

Interactive Data Pricing and Reference Data's growth is the result of new sales to existing customers and, to a lesser extent, sales to new customers, coupled with strong retention rates and higher usage revenue. Growth in this business is dependent, in large part, on our ability to continue the expansion of our data content offerings in order to meet the current and evolving needs of our customers, particularly as regulatory changes occur and as financial instruments become more numerous and complex. For example, we believe that the above-mentioned Business Entity Service, which we introduced during the first quarter of 2009, can assist institutional customers with their risk management and compliance activities.

Interactive Data Real-Time Services' growth reflects sales to new customers and new sales to existing customers. In particular, a wide range of financial institutions are seeking to subscribe to our low latency data services in order to support their algorithmic and electronic trading applications. This business also continues to expand its Interactive Data Managed Solutions business globally with both existing and new clients. This business continues to invest in enhancing and expanding its offerings and technical infrastructure. For example, in April 2009, this business introduced PlusBook™, a new consolidated order book service for the European financial industry designed to help institutions address the best execution mandates embodied in the Markets in Financial Instruments Directive (MiFID).

Growth in our Interactive Data Fixed Income Analytics business continues to be largely offset by cancellations, the majority of which are resulting from client consolidation activities. We continue to invest in product and business development activities that we believe will help expand our Fixed Income Analytics business with existing and prospective customers. For example, in February 2009, this business introduced new tools aimed at expanding the appeal of BondEdge to a broader base of end users.

Active Trader Services

eSignal has struggled to generate sustainable growth as it continues to face deteriorating conditions in the active trader market. Expansion of the eSignal business is partly dependent on the growth in online trading accounts managed by active traders. Stock market volatility is an important trend that can influence active trader subscriptions. During periods when the major stock markets are less volatile, active traders tend to trade less frequently and cancellations of eSignal's services by active traders typically increase and new subscriptions slow. In addition, periods of declines in the major stock markets have greater potential to lead to an increase in cancellations of eSignal's services by traders who are unable or unwilling to withstand losses. Related to these, we have experienced declines in eSignal's direct subscriber base in recent quarters. Difficult market conditions are also causing businesses that advertise online to reduce spending on online advertising, amid intensifying competition to attract advertisers. eSignal has experienced a decline in advertising revenue in recent quarters. Other factors that may affect eSignal's growth include the contribution of its redistribution partners who resell its data and analytics, and online advertising on its financial websites, price increases and changes in demand within its suite of real-time market data terminals, which vary in price.

We believe that eSignal's future growth is dependent on expanding its direct subscriber base for its offerings with both active traders and financial institutions. In particular, we believe that the combination of vendor consolidations and increased cost pressures is creating a significant opportunity for adoption of eSignal's desktop solutions by financial institutions in the wealth management market. For example, in April 2009, Interactive Data announced that Raymond James has deployed our real-time browser-based market data terminals for use by 4,000 financial advisors in their Private Client Group. eSignal's growth is also partially dependent on its ability to increase online advertising on its financial websites. To address the evolving needs of both financial institutions and active traders worldwide, eSignal continues to invest in adding new features to its various services, establishing strategic alliances, developing new offerings, and building traffic to and advertising on its financial websites. For example, in February 2009, eSignal introduced QuoTrek® 2.0, the latest update to the Company's mobile financial service available for Blackberry and other Java-enabled mobile devices.

                             Results of Operations

                            Selected Financial Data

                  (In thousands, except per share information)



                                                       For the Three Months Ended March 31,
                                                       2009                2008         % Change
REVENUE                                            $     186,034       $     181,711         2.4 %

COSTS AND EXPENSES:
Cost of services                                          60,425              60,191         0.4 %
Selling, general and administrative                       62,647              59,221         5.8 %
Depreciation                                               7,117               6,505         9.4 %
Amortization                                               7,513               6,854         9.6 %

Total costs and expenses                                 137,702             132,771         3.7 %

INCOME FROM OPERATIONS                                    48,332              48,940        (1.2 )%
Interest income                                              646               2,349       (72.5 )%

INCOME BEFORE INCOME TAXES                                48,978              51,289        (4.5 )%
Income tax expense                                        16,930              18,991       (10.9 )%

NET INCOME                                                32,048              32,298        (0.8 )%
Less: Net income attributable to noncontrolling
interest                                                    (107 )                -          100 %

NET INCOME ATTRIBUTABLE TO INTERACTIVE DATA
CORPORATION                                        $      31,941       $      32,298        (1.1 )%

EARNINGS PER SHARE- INTERACTIVE DATA
CORPORATION:
Basic                                              $        0.34       $        0.34         0.0 %
Diluted                                            $        0.33       $        0.33         0.0 %

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic                                                     93,693              94,270        (0.6 )%
Diluted                                                   96,006              97,352        (1.4 )%

On a quarterly and annual basis we calculate the impact of the change in foreign exchange rates between the current reporting period and the respective prior year reporting period. We provide the US dollar impact resulting from the change in foreign exchange rates on current period revenue, cost of services, selling, general and administrative and depreciation expenses. We calculate this impact by comparing the average foreign exchange rates for each operating currency for the current reporting period to the average foreign exchange rates for such operating currency for the respective year-ago reporting period. We believe that by providing this information, we are facilitating period-to-period comparisons of our underlying business.

2009 VERSUS 2008

Revenue



                                          For the Three Months Ended March 31,
                                                                       2009
                                                                     Foreign    Adjusted %
  (In thousands)                 2009        2008      % Change      Exchange     Change
  Institutional Services:
  Pricing and Reference Data   $ 121,830   $ 113,805        7.1 %       9,363         15.3 %
  Real-Time Services              34,928      37,979       (8.0 )%      4,859          4.8 %
  Fixed Income Analytics           8,194       8,105        1.1 %          31          1.5 %

                                           For the Three Months Ended March 31,
                                                                        2009
                                                                      Foreign    Adjusted %
 (In thousands)                   2009        2008      % Change      Exchange     Change
 Total Institutional Services   $ 164,952   $ 159,889        3.2 %      14,253         12.1 %
 Active Trader Services:
 eSignal                           21,082      21,822       (3.4 )%        816          0.3 %

 Total Active Trader Services      21,082      21,822       (3.4 )%        816          0.3 %

 TOTAL REVENUE                  $ 186,034   $ 181,711        2.4 %      15,069         10.7 %

Total revenue increased by $4,323,000, or 2.4%, to $186,034,000 in the first quarter of 2009 (or an increase of $19,392,000, or 10.7% excluding foreign exchange). This revenue increase included strong revenue growth at our Pricing and Reference Data business of $8,025,000. In addition, revenue at our Fixed Income Analytics business increased $89,000. This revenue growth was partially offset by decreased revenue of $3,051,000 at our Real-Time Services business, coupled with lower revenue of $740,000 at our eSignal business. The change in foreign exchange rates decreased revenue by $15,069,000 in the first quarter of 2009, mainly due to the strength of the US dollar against the UK pound sterling and the Euro. The Kler's business, which we acquired in August 2008, contributed . . .