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Commitments, Contingencies and Guarantees | 3 Months Ended
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Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract] |
Commitments, Contingencies and Guarantees | COMMITMENTS, CONTINGENCIES AND GUARANTEES Guarantees Issued and Credit Facilities Available In addition to the default fund contributions and margin collateral pledged by clearing members discussed in Note 14, “Clearing Operations,” we have obtained financial guarantees and credit facilities, which are guaranteed by us through counter indemnities, to provide further liquidity related to our clearing businesses. Financial guarantees issued to us totaled $5 million as of March 31, 2022 and December 31, 2021. As discussed in “Other Credit Facilities,” of Note 8, “Debt Obligations,” we also have credit facilities primarily related to our Nasdaq Clearing operations, which are available in multiple currencies, and totaled $204 million as of March 31, 2022 and $212 million as of December 31, 2021 in available liquidity, none of which was utilized. Other Guarantees Through our clearing operations in the financial markets, Nasdaq Clearing is the legal counterparty for, and guarantees the performance of, its clearing members. See Note 14, “Clearing Operations,” for further discussion of Nasdaq Clearing performance guarantees. We have provided a guarantee related to lease obligations for The Nasdaq Entrepreneurial Center, Inc., which is a not-for-profit organization designed to convene, connect and engage aspiring and current entrepreneurs. This entity is not included in the condensed consolidated financial statements of Nasdaq. We believe that the potential for us to be required to make payments under these arrangements is unlikely. Accordingly, no contingent liability is recorded in the Condensed Consolidated Balance Sheets for the above guarantees. Routing Brokerage Activities One of our broker-dealer subsidiaries, Nasdaq Execution Services, provides a guarantee to securities clearinghouses and exchanges under its standard membership agreements, which require members to guarantee the performance of other members. If a member becomes unable to satisfy its obligations to a clearinghouse or exchange, other members would be required to meet its shortfalls. To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral, as well as meet certain minimum financial standards. Nasdaq Execution Services’ maximum potential liability under these arrangements cannot be quantified. However, we believe that the potential for Nasdaq Execution Services to be required to make payments under these arrangements is unlikely. Accordingly, no contingent liability is recorded in the Condensed Consolidated Balance Sheets for these arrangements. Legal and Regulatory Matters Litigation As previously disclosed, we were named as one of many defendants in City of Providence v. BATS Global Markets, Inc., et al., 14 Civ. 2811 (S.D.N.Y.), which was filed on April 18, 2014 in the United States District Court for the Southern District of New York. The plaintiffs alleged that the defendants engaged in a scheme to manipulate the markets through high-frequency trading and asserted claims under Section 10(b) of the Exchange Act and Rule 10b-5. Discovery, focused on issues of whether the case could be certified as a class action and whether the plaintiffs’ claims were precluded by federal securities regulation, ended on April 26, 2021, and motions and expert testimony regarding those issues were filed on May 28, 2021. On March 28, 2022, the court issued an opinion and order excluding the testimony of one of the plaintiffs’ expert witnesses, concluding that the testimony was not sufficiently tied to the facts of the case and that it was not based on reliable methodology. On that basis, the court also granted summary judgment for the defendants, finding that there was no admissible evidence upon which a jury could reasonably conclude that the plaintiffs had suffered injury that was fairly traceable to the defendants’ conduct. On April 26, 2022, the plaintiffs filed an appeal of the decision to the United States Court of Appeals for the Second Circuit. On May 4, 2022, Nasdaq entered into an agreement with the plaintiffs under which the plaintiffs agreed to dismiss Nasdaq from their appeal with prejudice and Nasdaq agreed not to pursue sanctions against the plaintiffs or their counsel, without either Nasdaq or the plaintiffs providing financial compensation for the resolution. Accordingly, Nasdaq is no longer a party to the case and the matter is now fully resolved with respect to Nasdaq. Armenian Stock Exchange Investigation As disclosed in our prior filings with the SEC, a former non-U.S. subsidiary of Nasdaq, NASDAQ OMX Armenia OJSC, operated the Armenian Stock Exchange and the Central Depository of Armenia, which are regulated by the Central Bank of Armenia under Armenian law. In accordance with the requirements of Armenian law, Mellat Bank SB CJSC, an Armenian entity that is designated under Executive Order 13382, was a market participant on the Armenian Stock Exchange and, as a result, paid participation and transaction fees to the Armenian Stock Exchange during the period from 2012-2014. In 2014, we voluntarily self-disclosed this matter to the U.S. Department of Treasury’s Office of Foreign Assets Control, or OFAC, and received authorization from OFAC to continue, if necessary, certain activities pertaining to Mellat Bank SB CJSC in Armenia in a limited manner. In 2015, Nasdaq sold a majority of its ownership of Nasdaq OMX Armenia OJSC, with the remaining minority interest sold in 2018. OFAC has been conducting an inquiry into the Armenian Stock Exchange matter described above and in our prior filings since 2016, and during the first quarter of 2021, we were advised that OFAC is considering a civil monetary penalty in connection with that matter. We are currently in discussions with OFAC. While we believe our decision to voluntarily self-report this issue and our continued cooperation with OFAC, along with the permit we received from OFAC in connection with our transactions involving the Armenian Stock Exchange, will be mitigating factors with respect to the matter, any monetary fines or restrictions may nonetheless be material to our financial results in the period in which they are imposed. We cannot currently predict when our discussions with OFAC will conclude or the amount of any potential penalties imposed. Accordingly, we are unable to reasonably estimate any potential loss or range of loss and we have not accrued for a loss contingency. Nasdaq Commodities Clearing Default In December 2021, we recorded a charge related to an administrative fine issued by the SFSA associated with the default which occurred in 2018. The charge was included in regulatory expense in our Consolidated Statements of Income for the year ended December 31, 2021. See “Nasdaq Commodities Clearing Default,” of Note 14, “Clearing Operations,” for further information. Other Matters Except as disclosed above and in prior reports filed under the Exchange Act, we are not currently a party to any litigation or proceeding that we believe could have a material adverse effect on our business, consolidated financial condition, or operating results. However, from time to time, we have been threatened with, or named as a defendant in, lawsuits or involved in regulatory proceedings. In the normal course of business, Nasdaq discusses matters with its regulators raised during regulatory examinations or otherwise subject to their inquiries. Management believes that censures, fines, penalties or other sanctions that could result from any ongoing examinations or inquiries will not have a material impact on its consolidated financial position or results of operations. However, we are unable to predict the outcome or the timing of the ultimate resolution of these matters, or the potential fines, penalties or injunctive or other equitable relief, if any, that may result from these matters. Tax Audits We are engaged in ongoing discussions and audits with taxing authorities on various tax matters, the resolutions of which are uncertain. Currently, there are matters that may lead to assessments, some of which may not be resolved for several years. Based on currently available information, we believe we have adequately provided for any assessments that could result from those proceedings where it is more likely than not that we will be assessed. We review our positions on these matters as they progress. See “Tax Audits,” of Note 16, “Income Taxes,” for further discussion.

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