You should read the following discussion and analysis of the financial condition and results of operations of NASDAQ OMX in conjunction with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.

Overview

On February 27, 2008, Nasdaq and OMX AB combined their businesses and Nasdaq was renamed The NASDAQ OMX Group, Inc. Under the purchase method of accounting, Nasdaq was treated as the accounting and legal acquirer in the business combination with OMX AB. We also completed our acquisitions of PHLX in July 2008, BSX in August 2008 and certain businesses of Nord Pool in October 2008. These acquisitions also have been treated as purchases for accounting purposes, with NASDAQ OMX treated as the acquirer. Additionally, we purchased a majority stake in IDCG in December 2008 and a 20% aggregate equity interest in Agora-X (13.3% in March 2008 and an additional 6.7% in December 2008). The financial results of OMX AB are included in the consolidated financial results beginning on February 27, 2008. PHLX is included beginning July 2008, BSX beginning August 2008, the Nord Pool businesses beginning October 2008, IDCG beginning December 2008 and our initial equity interest in Agora-X of 13.3% beginning in March 2008 and the aggregate 20% beginning in December 2008.

Financial Highlights

The comparability of our operating results for the three months ended September 30, 2009 to the same period in 2008 is significantly impacted by our acquisition of PHLX and our Nord Pool transaction. The comparability of our operating results for the nine months ended September 30, 2009 to the same period in 2008 is significantly impacted by our business combination with OMX AB as well as the acquisition of PHLX and our Nord Pool transaction. In our discussion and analysis of results of operations, we have quantified the contribution of additional revenues or expenses resulting from OMX, NASDAQ OMX PHLX and NASDAQ OMX Commodities operations wherever such amounts were material. While identified amounts may provide indications of general trends, the analysis cannot completely address the effects attributable to integration efforts.

In addition, fluctuations in the value of foreign currencies relative to the U.S. dollar impacted our operating results. Impacts associated with fluctuations in foreign currency are discussed in more detail under "Item 3. Quantitative and Qualitative Disclosures about Market Risks." For the three months ended September 30, 2009, approximately 36% of our revenues less liquidity rebates, brokerage, clearance and exchange fees and 24% of our operating income were derived in currencies other than the U.S. dollar, primarily the Swedish Krona and Euro. For the nine months ended September 30, 2009, approximately 34% of our revenues less liquidity rebates, brokerage, clearance and exchange fees and 23% of our operating income were derived in currencies other than the U.S. dollar, primarily the Swedish Krona and Euro.

In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average rates of exchange. The following discussion of results of operations eliminates the impact of year-over-year foreign currency fluctuations to better measure the comparability of operating results between periods. Operating results excluding the impact of foreign currency fluctuations are calculated by translating the current year's results by the prior period's exchange rates.

The following summarizes significant changes in our financial performance in the third quarter and first nine months of 2009 when compared with the same periods in 2008:

• Revenues less liquidity rebates, brokerage, clearance and exchange fees decreased $50 million, or 12.5%, to $349 million in the third quarter of 2009, compared with $399 million in the third quarter of 2008, reflecting a decrease in operational revenues of $35 million and an unfavorable impact from foreign exchange of $15 million. The operational decline was primarily due to a decrease in U.S. cash equity trading revenues less liquidity rebates, brokerage, clearance and exchange fees due to declines in matched share volume and the average net fee per share matched on NASDAQ's trading system. In September 2009, we introduced a revised fee structure on NASDAQ OMX BX and in November 2009, we introduced a revised fee structure on NASDAQ to address the declines in the average net fee per share matched. Assuming volume and market share are comparable with the third quarter of 2009, our revised fee structure would favorably impact our fourth quarter 2009 U.S. cash equity trading revenues less liquidity rebates, brokerage, clearance and exchange fees.

• Revenues less liquidity rebates, brokerage, clearance and exchange fees increased $27 million, or 2.6%, to $1,084 million in the first nine months of 2009, compared with $1,057 million in the first nine months of 2008, reflecting an $85 million increase due to operational growth, partially offset by an unfavorable impact from foreign exchange of $58 million. The operational growth was primarily due to an increase in derivative trading revenues mainly due to the inclusion of NASDAQ OMX PHLX's derivative trading revenues for the full nine-month period in 2009 compared to two months in 2008 and the inclusion of results of operations from OMX for the full nine-month period in 2009 compared to seven months in 2008. The increase in operational growth was partially offset by a decrease in U.S. cash equity trading revenues less liquidity rebates, brokerage, clearance and exchange fees due to a decrease in the number of shares matched and routed on NASDAQ's trading system.

• Operating expenses decreased $9 million, or 4.0%, to $218 million in the third quarter of 2009, compared with $227 million in the third quarter of 2008, reflecting a favorable impact from foreign exchange of $11 million, partially offset by an increase in operating expenses of $2 million.

• Operating expenses increased $32 million, or 5.4%, to $629 million in the first nine months of 2009, compared with $597 million in the first nine months of 2008, reflecting an increase in operating expenses of $75 million, partially offset by a

• Net interest expense increased $32 million, or 91.4%, to $67 million in the first nine months of 2009, compared with $35 million in the first nine months of 2008, primarily reflecting a full nine months of interest expense in 2009 for the debt outstanding related to our business combination with OMX AB compared to seven months of debt outstanding in the first nine months of 2008. In addition, interest expense increased due to an increase in our outstanding debt obligations related to the acquisitions of PHLX and certain businesses of Nord Pool that were completed in the second half of 2008.

• Income (loss) from unconsolidated investees, net was a net loss of $20 million for the first nine months of 2009, compared with net income of $27 million for the first nine months of 2008. The net loss for the first nine months of 2009 is primarily due to a $19 million loss recorded in May 2009 related to the sale of our share capital in Orc. The net income for the first nine months of 2008 was primarily related to the NASDAQ Dubai transaction.

• Debt conversion expense was $25 million for the third quarter of 2009 and the first nine months of 2009 and was related to the conversion of most of our 3.75% convertible notes into common stock. The $25 million expense included a cash inducement of $9 million, the present value of series A convertible preferred stock issued totaling $15 million, and debt issuance and other costs of $1 million.

• Loss on foreign currency contracts, net of $51 million for the third quarter of 2008 and $11 million for the first nine months of 2008 primarily related to the Nord Pool acquisition and losses on forward currency contracts used to limit our exposure to foreign currency exchange rate fluctuations on contracted revenue streams. The loss for the first nine months of 2008 was partially offset by gains on foreign currency contracts related to our business combination with OMX AB.

These current and prior year items are discussed in more detail below.

Business Environment

We serve listed companies, market participants and investors by providing high quality cash equity, fixed-income and derivative markets, thereby facilitating economic growth and corporate entrepreneurship. We also provide market technology to exchanges and markets around the world. In broad terms, our business performance is impacted by a number of drivers including macroeconomic events affecting the risk and return of financial assets, investor sentiment, government and private sector demands for capital, the regulatory environment for primary and secondary equity markets, and the changing technology in the financial services industry. Our future revenues and net income will continue to be influenced by a number of domestic and international trends including:

• Trading volumes, particularly in U.S. and Nordic equity and derivative securities, which are driven primarily by overall macroeconomic conditions;

• The number of companies seeking equity financing, which is affected by factors such as investor demand, the global economy, availability of diverse sources of financing, and tax and regulatory policies;

• The gradual return of confidence to the credit markets increasing the availability of liquidity to our technology customers, suppliers, trading participants, and listed companies;

• The reinvigoration of certain market participants following the partial or complete takeover of financial institutions by national governments and the distressed mergers of market participant organizations;

• The emergence of new market participants seeing opportunities in the recovering global economy;

• The ongoing constraints on our fixed-income issuers' ability to access the credit markets due to rating downgrades or illiquidity in the market;

• The increasing optimism of our technology customers and suppliers arising from the recent securities market rise and the economic stabilization;

• Continuing pressure in transaction fee pricing due to intense competition in the U.S. and Europe;

• Competition for listings and trade executions related to pricing, and product and service offerings; and

• Other technological advancements and regulatory developments.

Currently our business drivers are characterized by improvement in investors' outlook for financial institutions and global economic growth, continued declines in the levels of market volatility, emerging industry reaction to regulatory initiatives and continued rapid evolution and deployment of new technology in the financial services industry. The business environment that influenced our financial performance during the third quarter of 2009 can be characterized as follows:

• A modestly increased pace for new equity issuance relative to the second quarter of 2009 with 20 IPOs across all exchanges in the U.S. and 12 new IPOs on The NASDAQ Stock Market and the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic;

• Improved yet limited access to debt and equity capital for both new and established companies;

• A 4% decrease relative to the third quarter of 2008 in the number of equity transactions on our Nordic and Baltic exchanges driven by decreased participant trading in response to changed economic conditions;

• A 29% decrease relative to the third quarter of 2008 in the value of equity transactions on our Nordic and Baltic exchanges resulting from lower equity valuations, lower trading activity due to diminished volatility and the relative return of overall trading activity to levels predating the financial crisis;

• A 31% decline experienced by our Nordic and Baltic exchanges relative to the third quarter of 2008 in number of traded derivatives contracts in equity related products (excluding EDX and Eurex) driven by reduced volatility and by the changed economic climate;

• A 1% decrease relative to the third quarter of 2008 in number of cleared derivatives contracts in fixed-income related products on our Nordic and Baltic exchanges;

• Intense competition among U.S. exchanges for both equity trading volume and listings, and growing competition in Europe;

• Globalization of exchanges, customers and competitors extending the competitive horizon beyond national markets;

• Consolidation of major global customers as financial institutions are acquired, merged, and restructured; and

• Market trends requiring continued investment in technology to meet customers' demands for speed, capacity, and reliability as markets adapt to a global financial industry, as increasing numbers of new companies surface, and as emerging countries show ongoing interest in developing their financial markets.

NASDAQ OMX's Operating Results

Key Drivers

The following table includes key drivers for our Market Services, Issuer
Services, and Market Technology segments. In evaluating the performance of our
business, our senior management closely watches these key drivers.



                                                 Three Months Ended                Nine Months Ended
                                                   September 30,                     September 30,
                                               2009             2008             2009             2008
Market Services
Cash Equity Trading
Average daily share volume in NASDAQ
securities (in billions)                          2.25             2.26             2.30             2.27
Matched market share in NASDAQ
securities executed on NASDAQ                     30.4 %           41.0 %           33.6 %           43.3 %
Matched market share in NASDAQ
securities executed on NASDAQ OMX BX               2.0 %             -               1.0 %             -
Market share reported to the
FINRA/NASDAQ Trade Reporting Facility in
NASDAQ securities(1)                              39.3 %           21.3 %           36.1 %           21.7 %
Total market share in NASDAQ
securities(2)                                     71.8 %           62.3 %           70.7 %           65.0 %
Matched market share in NYSE securities
executed on NASDAQ                                14.1 %           23.3 %           15.8 %           22.3 %
Matched market share in NYSE securities
executed on NASDAQ OMX BX                          3.1 %             -               1.3 %             -
Market share reported to the
FINRA/NASDAQ Trade Reporting Facility in
NYSE securities(1)                                35.4 %           18.7 %           31.8 %           18.2 %
Total market share in NYSE securities(2)          52.6 %           42.0 %           48.9 %           40.5 %
Matched market share in NYSE Amex and
regional securities executed on NASDAQ            22.2 %           35.3 %           24.6 %           35.3 %
Matched market share in NYSE Amex and
regional securities executed on NASDAQ
OMX BX                                             2.1 %             -               1.2 %             -
Market share reported to the
FINRA/NASDAQ Trade Reporting Facility in
NYSE Amex and regional securities(1)              34.4 %           14.6 %           31.9 %           15.7 %
Total market share in NYSE Amex and
regional securities(2)                            58.6 %           49.9 %           57.6 %           51.0 %
Matched share volume in all U.S.-listed
equities (in billions)                           131.4            179.2            436.5            469.3
Matched market share in all U.S.-listed
equities executed on NASDAQ                       19.4 %           29.6 %           21.5 %           30.0 %
Matched market share in all U.S.-listed
equities executed on NASDAQ OMX BX                 2.7 %             -               1.0 %             -
Average daily number of equity trades on
the exchanges that comprise NASDAQ OMX
Nordic and NASDAQ OMX Baltic                   189,002          196,671          210,004          197,869
Average daily value of shares traded on
the exchanges that comprise NASDAQ OMX
Nordic and NASDAQ OMX Baltic (in
billions)                                    $     3.0        $     5.0        $     3.1        $     5.6
Derivative Trading
Average daily volume of U.S. equity
option contracts (in millions)                    13.2             14.4             13.5             13.3
NASDAQ OMX PHLX matched market share of
U.S. equity options                               17.0 %           16.6 %           17.4 %           16.2 %
The NASDAQ Options Market matched market
share of U.S. equity options                       3.2 %            1.3 %            3.1 %            0.7 %
Average daily volume of equity option
and fixed-income contracts traded on the
exchanges that comprise NASDAQ OMX
Nordic and NASDAQ OMX Baltic                   298,849          391,049          317,958          434,211
Average daily volume of Nordic equity
option contracts traded on EDX London           87,636          169,604          110,076          160,957
Average daily volume of Finnish option
contracts traded on Eurex                       65,779           72,993           74,272           74,081
Clearing Turnover:
Power contracts (TWh)(3)                         480.0               -           1,573.5               -
Carbon contracts (1000 tCO2) (3)                13,745               -            34,196               -
Issuer Services
Initial public offerings:
NASDAQ                                              12                2               15               12
Exchanges that comprise NASDAQ OMX
Nordic and NASDAQ OMX Baltic                        -                 3               -                14
New listings:
NASDAQ(4)                                           33               58               67              148
Exchanges that comprise NASDAQ OMX
Nordic and NASDAQ OMX Baltic                         2                4                9               18
Number of listed companies:
NASDAQ(5)                                        2,863            3,062            2,863            3,062
Exchanges that comprise NASDAQ OMX
Nordic and NASDAQ OMX Baltic(6)                    800              841              800              841
Market Technology
Order intake (in millions)(7)                $      37        $      61        $      56        $     188
Total order value (in millions)(8)           $     318        $     465        $     318        $     465

(1) Transactions reported to the Financial Industry Regulatory Authority, or FINRA/NASDAQ Trade Reporting Facility.

(2) Includes transactions executed on both NASDAQ's and NASDAQ OMX BX's systems plus trades reported through the FINRA/NASDAQ Trade Reporting Facility.

(3) Transactions executed on Nord Pool and reported for clearing to NASDAQ OMX Commodities measured by Terawatt hours (TWh) and one thousand metric tons of carbon dioxide (1000 tCO2).

(4) New listings include IPOs, including those completed on a best efforts basis, issuers that switched from other listing venues, closed-end funds and separately listed ETFs.

(5) Number of listed companies for NASDAQ at period end, including separately listed ETFs.

(6) Represents companies listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic and companies on the alternative markets, NASDAQ OMX First North, at period end.

(7) Total contract value of orders signed.

(8) Represents total contract value of orders signed that are yet to be recognized as revenue.

Business Segments

We manage, operate and provide our products and services in three business segments: Market Services, Issuer Services and Market Technology.

• The Market Services segment includes our U.S. and European Transaction Services businesses and our Market Data business, which are interrelated because the Transaction Services businesses generate the quote and trade information that we sell to market participants and data distributors. Market Services also includes our Broker Services business.

• The Issuer Services segment includes our Global Listing Services and the Global Index Group businesses. The companies listed on The NASDAQ Stock Market and the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic represent a diverse array of industries. This diversity of companies listed on NASDAQ OMX markets allows us to develop industry-specific and other indexes that we use to develop and license NASDAQ OMX branded indexes, associated derivatives and index products as part of our Global Index Group. The Global Listing Services business also includes our Corporate Services business.

• The Market Technology segment provides technology solutions for trading, clearing and settlement, and information dissemination, and also offers facility management integration and advisory services.

Our management allocates resources, assesses performance and manages these businesses as three separate segments. See Note 16, "Segments," to the condensed consolidated financial statements for further discussion.

Segment Operating Results

Of our total third quarter 2009 revenues less liquidity rebates, brokerage, clearance and exchange fees of $349 million, 65.9% was from our Market Services segment, 22.9% was from our Issuer Services segment, 10.3% was from our Market Technology segment and 0.9% related to other revenues, compared to our total third quarter 2008 revenues less liquidity rebates, brokerage, clearance and exchange fees of $399 million, of which 69.7% was from our Market Services segment, 22.3% was from our Issuer services segment, 7.3% was from our Market Technology segment and 0.7% related to other revenues.

Of our total first nine months of 2009 revenues less liquidity rebates, brokerage, clearance and exchange fees of $1,084 million, 67.7% was from our Market Services segment, 22.2% was from our Issuer Services segment, 9.2% was from our Market Technology segment and 0.9% related to other revenues, compared to our total first nine months of 2008 revenues less liquidity rebates, brokerage, clearance and exchange fees of $1,057 million, of which 66.9% was from our Market Services segment, 24.4% was from our Issuer Services segment, 7.9% was from our Market Technology segment and 0.8% related to other revenues.

The following table shows our total revenues, cost of revenues and revenues less liquidity rebates, brokerage, clearance and exchange fees by segment:

                                    Three Months Ended                            Nine Months Ended
                                       September 30,           Percentage           September 30,           Percentage
                                    2009            2008         Change           2009          2008          Change
                                       (in millions)                                (in millions)
Market Services                   $     691        $  869           (20.5 )%    $  2,243      $  2,275            (1.4 )%
Cost of revenues                       (461 )        (591 )         (22.0 )%      (1,509 )      (1,568 )          (3.8 )%

Market Services revenues less
liquidity rebates, brokerage,
clearance and exchange fees             230           278           (17.3 )%         734           707             3.8 %
Issuer Services                          80            89           (10.1 )%         241           258            (6.6 )%
Market Technology                        36            29            24.1 %          100            84            19.0 %
Other                                     3             3              -               9             8            12.5 %

Total revenues less liquidity
rebates, brokerage, clearance
and exchange fees                 $     349        $  399           (12.5 )%    $  1,084      $  1,057             2.6 %

MARKET SERVICES

The following table shows total revenues less liquidity rebates, brokerage,
clearance and exchange fees from our Market Services segment:



                                    Three Months Ended                            Nine Months Ended
                                       September 30,           Percentage           September 30,           Percentage
                                    2009            2008         Change           2009          2008          Change
                                       (in millions)                                (in millions)
Transaction Services
Cash Equity Trading Revenues:
U.S. cash equity trading (1)      $     461        $  643           (28.3 )%    $  1,563      $  1,736           (10.0 )%
Cost of revenues:
Liquidity rebates                      (310 )        (471 )         (34.2 )%      (1,108 )      (1,201 )          (7.7 )%
Brokerage, clearance and
exchange fees(1)                       (127 )        (106 )          19.8 %         (334 )        (351 )          (4.8 )%

Total U.S. cash equity cost of
revenues                               (437 )        (577 )         (24.3 )%      (1,442 )      (1,552 )          (7.1 )%

U.S. cash equity trading
revenues less liquidity
rebates, brokerage, clearance
and exchange fees                        24            66           (63.6 )%         121           184           (34.2 )%
European cash equity trading             25            35           (28.6 )%          75            86           (12.8 )%

Total cash equity trading
revenues less liquidity
rebates, brokerage, clearance
and exchange fees                        49           101           (51.5 )%         196           270           (27.4 )%

Derivative Trading Revenues:
U.S. derivative trading(2)               58            44            31.8 %          171            46                 #
Cost of revenues:
Liquidity rebates                       (19 )         (13 )          46.2 %          (59 )         (15 )               #
Brokerage, clearance and
exchange fees(2)                         (5 )          (1 )               #           (8 )          (1 )               #

Total U.S. derivative trading
cost of revenues                        (24 )         (14 )          71.4 %          (67 )         (16 )               #

U.S. derivative trading
revenues less liquidity
rebates, brokerage, clearance
and exchange fees                        34            30            13.3 %          104            30                 #
European derivative trading              20            16            25.0 %           61            44            38.6 %

Total derivative trading
revenues less liquidity
. . .