Business Segments

We manage, operate and provide our products and services in four business segments: Market Services, Corporate Services, Information Services and Market Technology. See Note 1, “Organization and Nature of Operations,” for further discussion of our reportable segments.

Our management allocates resources, assesses performance and manages these businesses as four separate segments. We evaluate the performance of our segments based on several factors, of which the primary financial measure is operating income. Results of individual businesses are presented based on our management accounting practices and structure.

The following table presents certain information regarding our operating segments for the three and nine months ended September 30, 2018 and 2017:



	Market Services			Corporate Services		Information Services		Market Technology		Corporate Items			Consolidated
	(in millions)
Three Months Ended September 30, 2018
Total revenues	$	586		$	131	$	179	$	68	$	—		$	964
Transaction-based expenses	(364		)	—		—		—		—			(364		)
Revenues less transaction-based expenses	222			131		179		68		—			600
Operating income (loss)	$	121		$	42	$	117	$	9	$	(43	)	$	246
Three Months Ended September 30, 2017
Total revenues	$	581		$	126	$	150	$	62	$	46		$	965
Transaction-based expenses	(362		)	—		—		—		—			(362		)
Revenues less transaction-based expenses	219			126		150		62		46			603
Operating income (loss)	$	118		$	41	$	111	$	14	$	(22	)	$	262
Nine Months Ended September 30, 2018
Total revenues	$	1,968		$	395	$	528	$	194	$	56		$	3,141
Transaction-based expenses	(1,259		)	—		—		—		—			(1,259		)
Revenues less transaction-based expenses	709			395		528		194		56			1,882
Operating income (loss)	$	402		$	122	$	342	$	20	$	(99	)	$	787
Nine Months Ended September 30, 2017
Total revenues	$	1,808		$	370	$	432	$	176	$	143		$	2,929
Transaction-based expenses	(1,149		)	—		—		—		—			(1,149		)
Revenues less transaction-based expenses	659			370		432		176		143			1,780
Operating income (loss)	$	359		$	115	$	318	$	39	$	(81	)	$	750

Certain amounts are allocated to corporate items in our management reports as we believe they do not contribute to a meaningful evaluation of a particular segment's ongoing operating performance. These items include the following:

2018 Divestiture: We have included in corporate items the revenues and expenses of the Public Relations Solutions and Digital Media Services businesses which were part of the Corporate Solutions business within our Corporate Services segment as these businesses were sold in April 2018. See “2018 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

Amortization expense of acquired intangible assets: We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations. As such, if intangible asset amortization is included in performance measures, it is more difficult to assess the day-to-day operating performance of the segments, and the relative operating performance of the segments between periods. Management does not consider intangible asset amortization expense for the purpose of evaluating the performance of our segments or their managers or when making decisions to allocate resources. Therefore, we believe performance measures excluding intangible asset amortization expense provide management with a more useful representation of our segments' ongoing activity in each period.

Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed a divestiture and a number of acquisitions in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction.

Clearing Default Loss: In September 2018, we recorded an $8 million loss related to a default of a Nasdaq Clearing commodities member. See “Nasdaq Commodities Clearing Default,” of Note 15, “Clearing Operations,” for further discussion of the default. We have included the loss related to the default in corporate items as we believe it is non-recurring, as there has never been a loss due to member default in our clearinghouse, and should be excluded when evaluating the ongoing operating performance of the Market Services segment. Any expenses associated with the evaluation and enhancement of processes and procedures will be reflected within the Market Services segment.

Other significant items: We have included certain other charges or gains in corporate items, to the extent we believe they should be excluded when evaluating the ongoing operating performance of each individual segment. For the three and nine months ended September 30, 2018, other significant items included litigation costs and for the nine months ended September 30, 2018, out of period tax charges. For the nine months ended September 30, 2017, other significant items included loss on extinguishment of debt. We believe the exclusion of such amounts allows management and investors to better understand the ongoing financial results of each segment.

Accordingly, we do not allocate these costs for purposes of disclosing segment results because they do not contribute to a meaningful evaluation of a particular segment’s ongoing operating performance.

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A summary of our corporate items is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(in millions)
Revenues - divested businesses	$	—		$	46		$	56		$	143
Expenses:
Amortization expense of acquired intangible assets	27			22			83			67
Merger and strategic initiatives expense	6			3			7			20
Clearing default loss	8			—			8			—
Extinguishment of debt	—			—			—			10
Expenses - divested businesses	—			42			51			125
Other	2			1			6			2
Total expenses	43			68			155			224
Operating loss	$	(43	)	$	(22	)	$	(99	)	$	(81	)

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