UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 001-33392

NYSE Euronext

(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)		20-5110848 (I.R.S. Employer Identification Number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of November 1, 2011, the registrant had approximately 262 million shares of common stock, $0.01 par value per share, outstanding.

 

 

CERTAIN TERMS

In this Quarterly Report on Form 10-Q, “NYSE Euronext,” “we,” “us,” and “our” refer to NYSE Euronext, a Delaware corporation, and its subsidiaries, except where the context requires otherwise.

“Archipelago^®,” “Archipelago Exchange^®,” “Euronext^® ,” “NYSE ^® ,” “NYSE Blue^TM,” “NYSE Liffe ^® ,” “Pacific Exchange ^® “ and “SFTI^® ,” among others, are trademarks or service marks of NYSE Euronext or its licensees or licensors with all rights reserved.

“FINRA^®” is a trademark of the Financial Industry Regulatory Authority (“FINRA”) with all rights reserved, and is used under license from FINRA.

All other trademarks and service marks used herein are the property of their respective owners.

Unless otherwise specified or the context otherwise requires:

	•		“NYSE” refers to (1) prior to the completion of the merger between the New York Stock Exchange, Inc. and Archipelago Holdings, Inc. (“Archipelago”), which occurred on March 7, 2006, New York Stock Exchange, Inc., a New York Type A not-for-profit corporation, and (2) after completion of the merger, New York Stock Exchange LLC, a New York limited liability company, and, where the context requires, its subsidiaries, NYSE Market, Inc., a Delaware corporation, and NYSE Regulation, Inc., a New York not-for-profit corporation. New York Stock Exchange LLC is registered with the U.S. Securities and Exchange Commission (the “SEC”) under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) as a national securities exchange.
	•		“NYSE Arca” refers collectively to NYSE Arca, L.L.C., a Delaware limited liability company (formerly known as Archipelago Exchange, L.L.C.), NYSE Arca, Inc., a Delaware corporation (formerly known as the Pacific Exchange, Inc.), and NYSE Arca Equities, Inc., a Delaware corporation (formerly known as PCX Equities, Inc.). NYSE Arca, Inc. is registered with the SEC under the Exchange Act as a national securities exchange.
	•		“NYSE Amex” refers to NYSE Amex LLC, a Delaware limited liability company (formerly known as the American Stock Exchange LLC). NYSE Amex LLC is registered with the SEC under the Exchange Act as a national securities exchange.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business and industry. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks and uncertainties described under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed for the year ended December 31, 2010, and any additional risks and uncertainties described in our subsequent Quarterly Reports on Form 10-Q.

These risks and uncertainties are not exhaustive. Other sections of this report describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact that these factors will have on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations and we do not intend to do so.

Forward-looking statements include, but are not limited to, statements about:

	•		possible or assumed future results of operations and operating cash flows;
	•		strategies and investment policies;
	•		financing plans and the availability of capital;
	•		our competitive position and environment;
	•		potential growth opportunities available to us;
	•		the risks associated with potential acquisitions, alliances or combinations, including the proposed Deutsche Börse AG transaction described in our Annual Report on Form 10-K filed for the year ended December 31, 2010 and in our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K;
	•		the recruitment and retention of officers and employees;
	•		expected levels of compensation;
	•		potential operating performance, achievements, productivity improvements, efficiency and cost reduction efforts;
	•		the likelihood of success and impact of litigation;
	•		protection or enforcement of intellectual property rights;
	•		expectations with respect to financial markets, industry trends and general economic conditions;
	•		our ability to keep up with rapid technological change;
	•		the timing and results of our technology initiatives;
	•		the effects of competition; and
	•		the impact of future legislation and regulatory changes.

            We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We expressly qualify in their entirety all forward-looking statements attributable to us or any person acting on our behalf by the cautionary statements referred to above.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

NYSE EURONEXT
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In millions, except per share data)

(Unaudited)

		September 30,				December 31,
		2011				2010
Assets
Current assets:
Cash and cash equivalents		$	340			$	327
Financial investments			30				52
Accounts receivable, net			489				526
Deferred income taxes			70				120
Other current assets			194				149
Total current assets			1,123				1,174
Property and equipment, net			974				1,021
Goodwill			4,091				4,050
Other intangible assets, net			5,839				5,837
Deferred income taxes			564				633
Other assets			635				663
Total assets		$	13,226			$	13,378
Liabilities and equity
Current liabilities:
Accounts payable and accrued expenses		$	703			$	772
Related party payable			40				40
Section 31 fees payable			37				98
Deferred revenue			244				176
Short term debt			31				366
Deferred income taxes			24				2
Total current liabilities			1,079				1,454
Long term debt			2,084				2,074
Deferred income taxes			1,941				2,007
Accrued employee benefits			440				499
Deferred revenue			376				366
Related party payable			36				75
Other liabilities			27				59
Total liabilities			5,983				6,534
Commitments and contingencies
Redeemable noncontrolling interest			256				—
Equity
NYSE Euronext stockholders’ equity:
Common stock, $0.01 par value, 800 shares authorized; 277 and 276 shares issued; 262 and 261 shares outstanding			3				3
Common stock held in treasury, at cost; 15 shares			(416	)			(416	)
Additional paid-in capital			8,007				8,180
Retained earnings			484				212
Accumulated other comprehensive loss			(1,154	)			(1,183	)
Total NYSE Euronext stockholders’ equity			6,924				6,796
Noncontrolling interest			63				48
Total equity			6,987				6,844
Total liabilities and equity		$	13,226			$	13,378

The accompanying notes are an integral part of these condensed consolidated financial statements.

NYSE EURONEXT
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)

(Unaudited)

		Three months ended								Nine months ended
		September 30,								September 30,
		2011				2010				2011				2010
Revenues
Transaction and clearing fees		$	904			$	726			$	2,461			$	2,415
Market data			93				94				281				278
Listing			113				105				334				315
Technology services			92				82				263				236
Other revenues			56				43				159				136
Total revenues			1,258				1,050				3,498				3,380
Transaction-based expenses:
Section 31 fees			109				77				287				239
Liquidity payments, routing and clearing			445				374				1,167				1,243
Total revenues, less transaction-based expenses			704				599				2,044				1,898
Other operating expenses:
Compensation			160				147				480				479
Depreciation and amortization			72				69				212				201
Systems and communications			46				52				143				151
Professional services			77				76				219				200
Selling, general and administrative			61				75				197				222
Merger expenses and exit costs			29				25				68				70
Total other operating expenses			445				444				1,319				1,323
Operating income			259				155				725				575
Interest expense			(31	)			(27	)			(92	)			(80	)
Investment income			2				1				4				2
Loss from associates			(2	)			(1	)			(5	)			(4	)
Other (loss) income			(1	)			—				—				53
Income before income taxes			227				128				632				546
Income tax provision			(21	)			(5	)			(126	)			(119	)
Net income			206				123				506				427
Net (income) loss attributable to noncontrolling interest			(6	)			5				2				15
Net income attributable to NYSE Euronext		$	200			$	128			$	508			$	442
Basic earnings per share attributable to NYSE Euronext		$	0.76			$	0.49			$	1.94			$	1.69
Diluted earnings per share attributable to NYSE Euronext		$	0.76			$	0.49			$	1.93			$	1.69

The accompanying notes are an integral part of these condensed consolidated financial statements.

NYSE EURONEXT
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

(Unaudited)

		Nine months
		ended
		September 30,
		2011				2010
Cash flows from operating activities:
Net income		$	506			$	427
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			218				219
Deferred income taxes			(35	)			(5	)
Deferred revenue amortization			(72	)			(66	)
Stock-based compensation			30				29
Gain on sale of equity investment and businesses			—				(56	)
Other non-cash items			9				—
Change in operating assets and liabilities:
Accounts receivable, net			53				(19	)
Other assets			(83	)			(62	)
Accounts payable, accrued expenses, and Section 31 fees payable			8				(154	)
Related party payable			(40	)			(43	)
Deferred revenue			138				98
Accrued employee benefits			(57	)			(12	)
Net cash provided by operating activities			675				356
Cash flows from investing activities:
Sales of investments			740				316
Purchases of investments			(715	)			(299	)
Purchases of equity investments and businesses, net of cash acquired			(33	)			(8	)
Sale of equity investments at cost			—				175
Net proceeds from disposition of asset held-for-sale			34				—
Purchases of property and equipment			(116	)			(244	)
Other investing activities			4				(4	)
Net cash used in investing activities			(86	)			(64	)
Cash flows from financing activities:
Commercial paper (repayments) borrowings, net			(343	)			(140	)
Dividends to shareholders			(235	)			(235	)
Other			(1	)			—
Net cash used in financing activities			(579	)			(375	)
Effects of exchange rate changes on cash and cash equivalents			3				(16	)
Net increase (decrease) in cash and cash equivalents for the period			13				(99	)
Cash and cash equivalents at beginning of period			327				423
Cash and cash equivalents at end of period		$	340			$	324
Non-cash investing and financing activities:
Acquisition of APX		$	40			$	—
Issuance of shares in connection with the sale of the American Stock Exchange building		$	12			$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

NYSE EURONEXT
Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1—Organization and Basis of Presentation

Organization

NYSE Euronext is a holding company that, through its subsidiaries, operates the following securities exchanges: the New York Stock Exchange (“NYSE”), NYSE Arca, Inc. (“NYSE Arca”) and NYSE Amex LLC (“NYSE Amex”) in the United States and the European-based exchanges that comprise Euronext N.V. (“Euronext”)—the Paris, Amsterdam, Brussels and Lisbon stock exchanges, as well as the derivatives markets in London, Paris, Amsterdam, Brussels and Lisbon (collectively, “NYSE Liffe”) and the United States futures market, NYSE Liffe US LLC (“NYSE Liffe US”). NYSE Euronext is a global provider of securities listing, trading, market data products, and software and technology services. NYSE Euronext was formed in connection with the April 4, 2007 combination of NYSE Group (which was formed in connection with the March 7, 2006 merger of the NYSE and Archipelago) and Euronext. NYSE Euronext common stock is dually listed on the NYSE and Euronext Paris under the symbol “NYX.”

Basis of Presentation

The accompanying condensed unaudited consolidated financial statements include the accounts of NYSE Euronext and its subsidiaries.

The accompanying condensed unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair statement of the results for the period. All material intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally required in financial statements under U.S. GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading.

The preparation of these condensed unaudited consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could be materially different from these estimates. Certain prior period amounts have been reclassified to conform to the current period’s presentation.

The condensed consolidated financial statements are unaudited and should be read in conjunction with the audited financial statements of NYSE Euronext as of and for the year ended December 31, 2010. Operating results for the three months and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

Note 2—Strategic Investments and Divestitures

Proposed Business Combination

On February 15, 2011, we announced that we entered into a business combination agreement with Deutsche Börse AG (“Deutsche Börse”). Under the agreement, the companies will combine (the “Combined Company”) to create the world’s premier global exchange group. Each of the group’s national exchanges will keep its name in its local market and all exchanges will continue to operate under local regulatory frameworks and supervision. Following full completion of the contemplated transactions, the former Deutsche Börse shareholders would own approximately 60% of the Combined Company and the former NYSE Euronext shareholders would own approximately 40% of the Combined Company on a fully diluted basis and assuming that all Deutsche Börse shares are tendered in the contemplated exchange offer. The transaction is subject to approval by the relevant competition and financial, securities and other regulatory authorities in the United States and Europe, and other customary closing conditions, and we can provide no assurance that such approvals and conditions will be obtained or satisfied.

On July 7, 2011, NYSE Euronext shareholders approved the adoption of the business combination agreement with Deutsche Börse and related proposals, and on August 2, 2011, Deutsche Börse announced that holders representing more than 95% of its outstanding shares had tendered into the exchange offer, surpassing the requisite 75% needed to approve the proposed combination. On October 5, 2011, the EU competition commission issued a Statement of Objections, setting out the provisional position of the commission. We and Deutsche Börse presented our case to the commission in an oral hearing on October 27th and 28th. We expect the commission to complete its review in 2011. Subject also to satisfaction of other remaining approvals and conditions, we expect to close the transaction within a few weeks after the commission completes its review.

NYSE Amex Options

On June 29, 2011, NYSE Euronext completed the sale of a significant equity interest in NYSE Amex Options, one of our two U.S. options exchanges, to seven external investors, Bank of America Merrill Lynch, Barclays Capital, Citadel Securities, Citi, Goldman Sachs, TD AMERITRADE and UBS. NYSE Euronext remains the largest shareholder in the entity and manages the day-to-day operations of NYSE Amex Options, which operates under the supervision of a separate board of directors and a dedicated chief executive officer. NYSE Euronext consolidates this entity for financial reporting purposes.

As part of the agreement, the external investors have received an equity instrument which is tied to their individual contribution to the options exchange’s success. Under the terms of the agreement, the external investors have the option to require NYSE Euronext to repurchase a portion of the instruments on an annual basis over the course of five years starting in 2011. The amount NYSE Euronext is required to purchase under this arrangement is capped each year at between 5% and 15% of the total outstanding shares of NYSE Amex Options. NYSE Euronext recognized the full redemption value, i.e. fair value, of this instrument as mezzanine equity and classified the related balance as “Redeemable noncontrolling interest” in the condensed consolidated statement of financial condition as of September 30, 2011. On September 16, 2011, approximately 10% of the ownership stake held by external investors was put-back to NYSE Euronext which there by reduced the amount of redeemable noncontrolling interest.

NYSE Blue^TM

On February 18, 2011, the formation of the NYSE Blue joint venture was consummated. NYSE Blue is a new global company that is majority owned by NYSE Euronext. NYSE Blue consists of the businesses of APX (headquartered in the New York City region) and BlueNext (headquartered in Paris). In its environmental unit, NYSE Blue provides infrastructure and services to environmental sponsors and market participants, through its environmental management account for asset and risk management as well as its registry services for renewable energy in the United States and voluntary carbon credits worldwide. Additionally, NYSE Blue operates, through BlueNext, a leading spot exchange for the European Emissions Trading System, a multi-country, multi-sector greenhouse gas emission trading scheme. In its power unit, NYSE Blue is a leading provider of hosted power scheduling and settlement services for wholesale power market participants. NYSE Euronext consolidates the results of operations and financial condition of NYSE Blue.

New York Portfolio Clearing (“NYPC”)

NYPC, NYSE Euronext’s joint venture with The Depository Trust & Clearing Corporation (“DTCC”), became operational in the first quarter of 2011. NYPC will initially clear fixed income derivatives traded on NYSE Liffe US and will have the ability to provide clearing services for other exchanges and Derivatives Clearing Organizations in the future. NYPC uses NYSE Euronext’s clearing technology, TRS/CPS, to process and manage cleared positions and post-trade position transfers. DTCC’s Fixed Income Clearing Corporation provides capabilities in risk management, settlement, banking and reference data systems. As of September 30, 2011, NYSE Euronext had a minority ownership interest in, and board representation on, DTCC. NYSE Euronext has agreed to make a $50 million financial guarantee as an additional contribution to the NYPC default fund, of which $25 million had been contributed as of September 30, 2011 and is held in escrow by NYPC. NYSE Euronext’s investment in NYPC is treated as an equity method investment.

Sale of American Stock Exchange building (“Amex building”)

In the first quarter of 2011, the Amex building was sold and, in accordance with the Amex acquisition agreement, approximately 340,000 NYSE Euronext shares of common stock were issued to former Amex members in June 2011.

Note 3—Restructuring

Severance Costs

As a result of streamlining certain business processes, NYSE Euronext has launched various voluntary and involuntary severance plans in the U.S. and Europe. The following is a summary of the severance charges recognized in connection with these plans, utilization of the accrual through September 30, 2011, and the remaining accrual as of September 30, 2011 (in millions):

										Information Services
						Cash Trading				and Technology				Corporate/
		Derivatives				and Listings				Solutions				Eliminations				Total
Balance as of December 31, 2010		$	1			$	30			$	5			$	2			$	38
Employee severance and related benefits			—				9				2				—				11
Severance and benefit payments			(1	)			(27	)			(4	)			(2	)			(34	)
Currency translation and other			—				1				—				—				1
Balance as of September 30, 2011		$	—			$	13			$	3			$	—			$	16

The severance charges are included in merger expenses and exit costs in the condensed consolidated statements of operations. Based on current severance dates and the accrued severance at September 30, 2011, NYSE Euronext expects to pay these amounts throughout 2011 and into 2012.

Note 4—Segment Reporting

NYSE Euronext operates under three reportable segments: Derivatives, Cash Trading and Listings, and Information Services and Technology Solutions. We evaluate the performance of our operating segments based on revenue and operating income. We have aggregated all of our corporate costs, including the costs to operate as a public company, within “Corporate/ Eliminations.”

The following is a description of our reportable segments:

Derivatives consist of the following in NYSE Euronext’s global businesses:

•		providing access to trade execution in derivatives products, options and futures;
•		providing certain clearing services for derivatives products; and
•		selling and distributing market data and related information.

Cash Trading and Listings consist of the following in NYSE Euronext’s global businesses:

•		providing access to trade execution in cash trading and settlement of transactions in certain European markets;
•		obtaining new listings and servicing existing listings;
•		selling and distributing market data and related information; and
•		providing regulatory services.

Information Services and Technology Solutions consist of the following in NYSE Euronext’s global businesses:

•		operating sellside and buyside connectivity networks for our markets and for other major market centers and market participants in the United States, Europe and Asia;
•		providing trading and information technology software and solutions;

•		selling and distributing market data and related information to data subscribers for proprietary data products; and
•		providing multi-asset managed services and expert consultancy to exchanges and liquidity centers.

Summarized financial data of our reportable segments is as follows (in millions):

						Cash Trading				Information Services and				Corporate/
Three months ended September 30,		Derivatives				and Listings				Technology Solutions				Eliminations				Total
2011
Revenues		$	308			$	825			$	125			$	—			$	1,258
Operating income (loss)			128				149				29				(47	)			259
2010
Revenues		$	243			$	694			$	113			$	—			$	1,050
Operating income (loss)			88				86				19				(38	)			155

						Cash Trading				Information Services and				Corporate/
Nine months ended September 30,		Derivatives				and Listings				Technology Solutions				Eliminations				Total
2011
Revenues		$	891			$	2,246			$	363			$	(2	)		$	3,498
Operating income (loss)			384				397				91				(147	)			725
2010
Revenues		$	846			$	2,205			$	330			$	(1	)		$	3,380
Operating income (loss)			350				292				46				(113	)			575

Note 5—Earnings and Dividend Per Share

The following is a reconciliation of the basic and diluted earnings per share computations (in millions, except per share data):

		Three months ended								Nine months ended
		September 30,								September 30,
		2011				2010				2011				2010
Net income		$	206			$	123			$	506			$	427
Net (income) loss attributable to noncontrolling interest			(6	)			5				2				15
Net income attributable to NYSE Euronext		$	200			$	128			$	508			$	442
Shares of common stock and common stock equivalents: Weighted average shares used in basic computation			262				261				262				261
Dilutive effect of: Employee stock options and restricted stock units			1				1				1				1
Weighted average shares used in diluted computation			263				262				263				262
Basic earnings per share attributable to NYSE Euronext		$	0.76			$	0.49			$	1.94			$	1.69
Diluted earnings per share attributable to NYSE Euronext		$	0.76			$	0.49			$	1.93			$	1.69
Dividends per common share		$	0.30			$	0.30			$	0.90			$	0.90

As of September 30, 2011 and 2010, 4.1 million and 4.7 million restricted stock units, respectively, and options to purchase 0.2 million and 0.5 million shares of common stock, respectively, were outstanding. For the three and nine months ended September 30, 2011, 0.3 million awards were excluded from the diluted earnings per share computation because their effect would have been anti-dilutive. For the three and nine months ended September 30, 2010, 1.4 million and 0.8 million awards, respectively, were excluded from the diluted earnings per share computation because their effect would have been anti-dilutive.

Note 6—Pension and Other Benefit Programs

The components of net periodic (benefit) expense are set forth below (in millions):

																		Postretirement
		Pension Plans								SERP Plans								Benefit Plans
Three months ended September 30,		2011				2010				2011				2010				2011				2010
Service cost		$	1			$	1			$	—			$	—			$	—			$	—
Interest cost			12				12				1				2				2				3
Expected return on assets			(15	)			(14	)			—				—				—				—
Actuarial loss			(1	)			2				—				—				—				—
Curtailment loss			—				—				—				—				—				—
Net periodic (benefit) cost		$	(3	)		$	1			$	1			$	2			$	2			$	3

																		Postretirement
		Pension Plans								SERP Plans								Benefit Plans
Nine months ended September 30,		2011				2010				2011				2010				2011				2010
Service cost		$	3			$	3			$	—			$	—			$	—			$	—
Interest cost			36				36				3				4				6				9
Expected return on assets			(43	)			(42	)			—				—				—				—
Actuarial loss			6				6				1				—				—				—
Curtailment loss			—				—				—				—				2				2
Net periodic cost		$	2			$	3			$	4			$	4			$	8			$	11

During the three and nine months ended September 30, 2011, NYSE Euronext contributed $2 million and $41 million, respectively, to its pension plans. Based on current actuarial assumptions, NYSE Euronext anticipates funding an additional $1 million to its pension plans for the remainder of fiscal 2011.

Note 7—Goodwill and Other Intangible Assets

The change in the net carrying amount of goodwill (in millions):

						Cash Trading				Information Services and
		Derivatives				and Listings				Technology Solutions				Total
Balance as of December 31, 2010		$	2,252			$	1,439			$	359			$	4,050
Acquisitions			—				19				11				30
Purchase accounting adjustments			—				(9	)			—				(9	)
Currency translation and other			5				13				2				20
Balance as of September 30, 2011		$	2,257			$	1,462			$	372			$	4,091

The following table presents the details of the intangible assets (in millions):

		Assigned				Accumulated
Balance as of September 30, 2011		value				amortization				Useful Life (in years)
National securities exchange registrations		$	5,025			$	—			Indefinite
Customer relationships			872				204				7 to 20
Trade names and other			192				46				2 to 20
Other intangible assets		$	6,089			$	250

		Assigned				Accumulated
Balance as of December 31, 2010		value				amortization				Useful Life (in years)
National securities exchange registrations		$	5,003			$	—			Indefinite
Customer relationships			852				166				7 to 20
Trade names and other			187				39				2 to 20
Other intangible assets		$	6,042			$	205

For the three and nine months ended September 30, 2011, amortization expense for the intangible assets was approximately $15 million and $46 million, respectively. For the three and nine months ended September 30, 2010, amortization expense for the intangible assets was approximately $14 million and $43 million, respectively.

The estimated future amortization expense of acquired purchased intangible assets as of September 30, 2011 was as follows (in millions):

Year ending December 31,
Remainder of 2011 (from October 1st through December 31st)		$	12
2012			58
2013			58
2014			58
2015			58
Thereafter			570
Total		$	814

Note 8—Fair Value of Financial Instruments

NYSE Euronext accounts for certain financial instruments at fair value in accordance with the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification. The Fair Value Measurements and Disclosures Topic defines fair value, establishes a fair value hierarchy on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of financial instruments is determined using various techniques that involve some level of estimation and judgment, the degree of which is dependent on the price transparency and the complexity of the instruments.

In accordance with the Fair Value Measurements and Disclosures Topic, NYSE Euronext has categorized its financial instruments measured at fair value into the following three-level fair value hierarchy based upon the level of judgment associated with the inputs used to measure the fair value:

	•		Level 1: Inputs are unadjusted quoted prices for identical assets or liabilities in an active market that NYSE Euronext has the ability to access. Generally, equity and other securities listed in active markets and investments in publicly traded mutual funds with quoted market prices are reported in this category.
	•		Level 2: Inputs are either directly or indirectly observable for substantially the full term of the assets or liabilities. Generally, municipal bonds, certificates of deposits, corporate bonds, mortgage securities, asset backed securities and certain derivatives are reported in this category. The valuation of these instruments is based on quoted prices or broker quotes for similar instruments in active markets.
	•		Level 3: Some inputs are both unobservable and significant to the overall fair value measurement and reflect management’s best estimate of what market participants would use in pricing the asset or liability. Generally, assets and liabilities carried at fair value and included in this category are certain structured investments, derivatives, commitments and guarantees that are neither eligible for Level 1 nor Level 2 due to the valuation techniques used to measure their fair value. The inputs used to value these instruments are both observable and unobservable and may include NYSE Euronext’s own projections.

If the inputs used to measure the financial instruments fall within different levels of the fair value hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs may result in a reclassification for certain financial assets or liabilities.

The following table presents NYSE Euronext’s fair value hierarchy of those assets and liabilities measured at fair value on a recurring basis as of September 30, 2011 and December 31, 2010 (in millions):

		As of September 30, 2011
		Level 1				Level 2				Level 3				Total
Assets
Mutual Funds (SERP/SESP)(1)		$	30			$	—			$	—			$	30
Total Financial investments		$	30			$	—			$	—			$	30
Liabilities
Foreign exchange derivative contracts		$	—			$	3			$	—			$	3

		As of December 31, 2010
		Level 1				Level 2				Level 3				Total
Assets
Mutual Funds (SERP/SESP)(1)		$	37			$	—			$	—			$	37
Corporate Bonds			—				1				—				1
Auction Rate Securities			—				—				7				7
Equity Securities			1				—				—				1
Foreign exchange derivative contracts			—				6				—				6
Total Financial investments		$	38			$	7			$	7			$	52
Liabilities
Foreign exchange derivative contracts		$	—			$	—			$	—			$	—

The fair value of our long-term debt instruments was approximately $2.2 billion as of September 30, 2011. The carrying value of all other financial assets and liabilities approximates fair value. As of September 30, 2011 and December 31, 2010, NYSE Euronext had $0 and $7 million, respectively, of Level 3 securities consisting of auction rate securities purchased by NYSE Amex prior to its acquisition by NYSE Euronext on October 1, 2008. The decrease in the amount of auction rate securities from $7 million at December 31, 2010 to $0 is attributable to the disposal of all of these securities.

Note 9—Derivatives and Hedges

NYSE Euronext may use derivative instruments to hedge financial risks related to its financial position or risks that are otherwise incurred in the normal course of its operations. NYSE Euronext does not use derivative instruments for speculative purposes and enters into derivative instruments only with counterparties that meet high creditworthiness and rating standards. NYSE Euronext adopted the Subtopic 65 in the Derivatives and Hedging Topic of the FASB Accounting Standards Codification on January 1, 2009.

NYSE Euronext records all derivative instruments at fair value on the condensed consolidated statement of financial condition. Certain derivative instruments are designated as hedging instruments under fair value hedging relationships, cash flow hedging relationships or net investment hedging relationships. Other derivative instruments remain undesignated. The details of each designated hedging relationship are formally documented at the inception of the relationship, including the risk management objective, hedging strategy, hedged item, specific risks being hedged, derivative instrument, how effectiveness is being assessed and how ineffectiveness, if any, will be measured. The hedging instrument must be highly effective in offsetting the changes in cash flows or fair value of the hedged item and the effectiveness is evaluated quarterly on a retrospective and prospective basis.

The following presents the aggregated notional amount and the fair value of NYSE Euronext’s derivative instruments reported on the condensed consolidated statement of financial condition (in millions):

						Fair Value of Derivative
		Notional				Instruments
September 30, 2011		Amount				Asset(1)				Liability
Derivatives not designated as hedging instruments
Foreign exchange contracts		$	491			$	0			$	3
Derivatives designated as hedging instruments
Foreign exchange contracts			—				—				—
Total derivatives		$	491			$	0			$	3

The effective portion and the ineffective portion of the pre-tax gains and losses on derivative instruments designated as hedged items under net investment hedging relationship for the three and nine months ended September 30, 2011 were insignificant.

Pre-tax gains and losses on derivative instruments not designated in hedging relationships for the three and nine months ended September 30, 2011 were as follows (in millions):

		Gain/ (loss) recognized in income
		Three months ended				Nine months ended
Derivatives not designated as hedging instrument		September 30, 2011
Foreign exchange contracts		$	(4	)		$	12

For the nine months ended September 30, 2011, NYSE Euronext had euro/U.S. dollar and sterling/U.S. dollar foreign exchange contracts in place with tenors less than 3 months in order to hedge various financial positions. These contracts were not designated as hedging instruments under the Derivatives and Hedging Topic. As of September 30, 2011, NYSE Euronext had a £146 million ($228 million) sterling/U.S. dollar foreign exchange swap outstanding with a positive fair value of $0 million and a €193 million ($263 million) euro/U.S. dollar contract outstanding with a negative fair value of $3 million. These instruments matured in October 2011. For the three and nine months ended September 30, 2011, the cumulative net loss recognized under foreign exchange contracts in “Other income” in the condensed consolidated statement of operations was insignificant.

Pre-tax net gains on non-derivative net investment hedging relationships recognized in “Other comprehensive income” for the three months ended September 30, 2011 was $99 million and pre-tax net losses on non-derivative net investment hedging relationships recognized in “Other comprehensive income” for the nine months ended September 30, 2011 was $35 million.

For the nine months ended September 30, 2011, NYSE Euronext had no derivative instruments in fair value hedging relationships and cash flow hedging relationships.

Note 10—Commitments and Contingencies

For the nine months ended September 30, 2011, the following supplements and amends our discussion set forth in Note 17 (“Commitments and Contingencies — Legal Matters”) to Item 8 of the Annual Report on Form 10-K filed by NYSE Euronext for the year ended December 31, 2010, and Note 10 (“Commitments and Contingencies”) of the Quarterly Reports on Form 10-Q filed by NYSE Euronext for the three months ended March 31, 2011 and the six months ended June 30, 2011, respectively, and no other matters were reportable during the period.

Costs Associated with the Proposed Business Combination

NYSE Euronext estimates that it will incur approximately $120 million of legal, banking and other professional fees and costs related to the proposed combination with Deutsche Börse, of which approximately $60 million will be contingent upon approval and consummation of the combination and approximately $60 million of which will be payable regardless of whether the combination is completed.

Through September 30, 2011, NYSE Euronext incurred approximately $45 million of fees and other costs directly attributable to the proposed business combination. Such costs are included in “Merger expenses and exit costs” in the condensed consolidated statement of operations for the nine months ended September 30, 2011.

IRS Notice

Subsequent to an appeals conference in the matter, the Internal Revenue Service Appeals Office issued a determination on October 5, 2011 that there is no deficiency in the tax returns filed by NYSE for the years 2001, 2002 and 2003, thereby resolving the matter in favor of the NYSE.

In addition to the matters described above and in the prior disclosures incorporated herein by reference, NYSE Euronext is from time to time involved in various legal proceedings that arise in the ordinary course of its business. NYSE Euronext records accrued liabilities for litigation and regulatory matters when those matters represent loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, NYSE Euronext does not establish an accrued liability. As a litigation or regulatory matter develops, NYSE Euronext evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. NYSE Euronext does not believe, based on currently available information, that the results of any of these various proceedings will have a material adverse effect on its financial statements as a whole.

Note 11—Income Taxes

For the three and nine months ended September 30, 2011, our effective tax rate was 9.5% and 20.0%, respectively. NYSE Euronext’s effective tax rate was lower than the statutory rate primarily due to a discrete deferred tax benefit of $40 million related to an enacted reduction in the corporate tax rate from 27% to 25% in the United Kingdom and higher earnings generated from foreign operations, where the applicable foreign jurisdiction tax rate is lower than the statutory rate. The applicable tax rate was 4% and 22% for both the three and nine months ended September 30, 2010, respectively. The 2010 effective tax rate was lower than the U.S. statutory rate primarily due to a discrete deferred tax benefit related to an enacted reduction in the corporate tax rate from 28% to 27% in the United Kingdom, higher earnings from foreign operations and the reorganization of certain of our European businesses.

Note 12—Related Party Transactions

LCH.Clearnet

NYSE Liffe’s London Market (for the purposes of this section, “NYSE Liffe”) launched NYSE Liffe Clearing in July 2009. This involves an arrangement with LCH.Clearnet Ltd (“LCH.Clearnet”), whereby NYSE Liffe assumes full responsibility for clearing activities for the U.K. derivatives market. To achieve this, NYSE Liffe became a self-clearing Recognised Investment Exchange and outsourced the existing clearing guarantee arrangements and related risk functions to LCH.Clearnet.

On June 16, 2011, NYSE Euronext announced that LCH.Clearnet agreed to extend the arrangements under which LCH.Clearnet provides clearing services to the European securities and continental derivatives markets of NYSE Euronext. Termination of these arrangements was scheduled to occur in November 2011, following the notice given by NYSE Euronext in May 2010. The agreed extension means that the current clearing arrangements will continue to June 2013 for derivatives and December 2013 for cash.

As of September 30, 2011, NYSE Euronext had a 9.1% stake in LCH.Clearnet Group Limited’s outstanding share capital and the right to appoint one director to its board of directors.

Qatar

On June 19, 2009, NYSE Euronext agreed to contribute $200 million in cash to acquire a 20% ownership interest in the Qatar Exchange, $40 million of which was paid upon closing on June 19, 2009, with the remaining $160 million to be paid annually in four equal installments. NYSE Euronext’s investment in the Qatar Exchange is treated as an equity method investment. The $76 million present value of this remaining liability is included in “Related party payable” in the condensed consolidated statements of financial condition as of September 30, 2011.

New York Portfolio Clearing (“NYPC”)

NYPC, NYSE Euronext’s joint venture with The Depository Trust & Clearing Corporation (“DTCC”), became operational in the first quarter of 2011. NYPC will initially clear fixed income derivatives traded on NYSE Liffe US and will have the ability to provide clearing services for other exchanges and Derivatives Clearing Organizations in the future. NYPC uses NYSE Euronext’s clearing technology, TRS/CPS, to process and manage cleared positions and post-trade position transfers. DTCC’s Fixed Income Clearing Corporation provides capabilities in risk management, settlement, banking and reference data systems. As of September 30, 2011, NYSE Euronext had a minority ownership interest in, and board representation on, DTCC.

The following presents revenues derived and expenses incurred from these related parties (in millions):

		Three months ended September 30,								Nine months ended September 30,
Income (expenses)		2011				2010				2011				2010
LCH.Clearnet		$	(12	)		$	(12	)		$	(35	)		$	(33	)
Qatar			2				11				6				24
NYPC			—				—				1				—

Note 13—Other Comprehensive Income

The following outlines the components of other comprehensive income (in millions):

		Three months ended September 30,
		2011												2010
		NYSE				Noncontrolling								NYSE				Noncontrolling
Income/(expenses)		Euronext				interest				Total				Euronext				interest				Total
Net income (loss)		$	200			$	6			$	206			$	128			$	(5	)		$	123
Change in market value adjustments of available-for-sale securities			—				—				—				7				—				7
Foreign currency translation adjustments			(362	)			(2	)			(364	)			486				2				488
Total comprehensive income (loss)		$	(162	)		$	4			$	(158	)		$	621			$	(3	)		$	618

		Nine months ended September 30,
		2011												2010
		NYSE				Noncontrolling								NYSE				Noncontrolling
Income/(expenses)		Euronext				Interest				Total				Euronext				Interest				Total
Net income (loss)		$	508			$	(2	)		$	506			$	442			$	(15	)		$	427
Change in market value adjustments of available-for-sale securities			4				—				4				5				—				5
Foreign currency translation adjustments			23				—				23				(277	)			(2	)			(279	)
Total comprehensive income (loss)		$	535			$	(2	)		$	533			$	170			$	(17	)		$	153

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     You should read the following discussion together with the condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements. Actual results may differ from such forward-looking statements. See “Forward-Looking Statements” herein and the information under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2010 and under Part II, Item IA of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011 and June 30, 2011, “Risk Factors”. Certain prior period amounts presented in the discussion and analysis have been reclassified to conform to the current presentation.

Overview

NYSE Euronext was formed from the combination of the businesses of NYSE Group and Euronext, which was consummated on April 4, 2007. Prior to that date, NYSE Euronext had no significant assets and did not conduct any material activities other than those incidental to its formation. Following consummation of the combination, NYSE Euronext became the parent company of NYSE Group and Euronext and each of their respective subsidiaries. Under the purchase method of accounting, NYSE Group was treated as the accounting and legal acquiror in the combination with Euronext. On October 1, 2008, NYSE Euronext completed its acquisition of The Amex Membership Corporation, including its subsidiary, the American Stock Exchange, which is now known as NYSE Amex.

We operate under three reportable segments: Derivatives, Cash Trading and Listings, and Information Services and Technology Solutions. We evaluate the performance of our operating segments based on revenue and operating income. We have aggregated all of our corporate costs, including the costs to operate as a public company, within “Corporate/ Eliminations.”

The following is a description of our reportable segments:

Derivatives consist of the following in NYSE Euronext’s global businesses:

•		providing access to trade execution in derivatives products, options and futures;
•		providing certain clearing services for derivatives products; and
•		selling and distributing market data and related information.

Cash Trading and Listings consist of the following in NYSE Euronext’s global businesses:

•		providing access to trade execution in cash trading and settlement of transactions in certain European markets;
•		obtaining new listings and servicing existing listings;
•		selling and distributing market data and related information; and
•		providing regulatory services.

Information Services and Technology Solutions consist of the following in NYSE Euronext’s global businesses:

•		operating sellside and buyside connectivity networks for our markets and for other major market centers and market participants in the United States, Europe and Asia;
•		providing trading and information technology software and solutions;
•		selling and distributing market data and related information to data subscribers for proprietary data products; and
•		providing multi-asset managed services and expert consultancy to exchanges and liquidity centers.

For a discussion of these segments, see Note 4 to the condensed consolidated financial statements.

Proposed Business Combination

On February 15, 2011, we announced that we entered into a business combination agreement with Deutsche Börse AG (“Deutsche Börse”). Under the agreement, the companies will combine (the “Combined Company”) to create the world’s premier global exchange group. Each of the group’s national exchanges will keep its name in its local market and all exchanges will continue to operate under local regulatory frameworks and supervision. Following full completion of the contemplated transactions, the former Deutsche Börse shareholders would own approximately 60% of the Combined Company and the former NYSE Euronext shareholders would own approximately 40% of the Combined Company on a fully diluted basis and assuming that all Deutsche Börse shares are tendered in the contemplated exchange offer. The transaction is subject to approval by the relevant competition and financial, securities and other regulatory authorities in the United States and Europe, and other customary closing conditions, and we can provide no assurance that such approvals and conditions will be obtained or satisfied.

On July 7, 2011, NYSE Euronext shareholders approved the adoption of the business combination agreement with Deutsche Börse and related proposals, and on August 2, 2011, Deutsche Börse announced that holders representing more than 95% of its outstanding shares had tendered into the exchange offer, surpassing the requisite 75% needed to approve the proposed combination. On October 5, 2011, the EU competition commission issued a Statement of Objections, setting out the provisional position of the commission. We and Deutsche Börse presented our case to the commission in an oral hearing on October 27th and 28th. We expect the commission to complete its review in 2011. Subject also to satisfaction of other remaining approvals and conditions, we expect to close the transaction within a few weeks after the commission completes its review.

The foregoing summary of the business combination agreement and the Proposed Business Combination does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the business combination agreement, which was filed with our Current Report on Form 8-K filed with the SEC on February 16, 2011, as amended, and incorporated herein by reference.

Factors Affecting Our Results

The business environment in which NYSE Euronext operates directly affects its results of operations. Its results have been and will continue to be affected by many factors, including the level of trading activity in its markets, which during any period is significantly influenced by general market conditions, competition, market share and the pace of industry consolidation, broad trends in the brokerage and finance industry, price levels and price volatility, the number and financial health of companies listed on the NYSE Euronext’s cash markets, changing technology in the financial services industry, and legislative as well as regulatory changes and requirements, including competition law, among other factors. In particular, in recent years, the business environment has been characterized by increasing competition among global markets for listing and trading volumes; the globalization of exchanges, customers and competitors; market participants’ demand for speed, capacity and reliability, which requires continuing investment in technology; and increasing competition for market data revenues. For example, the growth of NYSE Euronext’s trading and market data revenues could be adversely impacted if it is unsuccessful in attracting additional volumes. Historically NYSE Euronext has seen its market share, trading revenues and share of market data revenues decline through the entrance of new players, increased competition, and more recently an increase in internalization and trading on alternative trading systems. While NYSE Euronext’s market share has been relatively stable in the past year, market share dynamics are constantly changing and no assurance can be provided that further declines will not occur in the future. The maintenance and growth of NYSE Euronext’s revenues could also be impacted if it faces increased pressure on pricing.

Lingering uncertainty in the global credit markets continues to impact economies around the world. Equity market indices have experienced volatility and the market may remain volatile throughout 2011. Economic uncertainty in the European Union and United States and the political upheaval in certain North African countries could spread to other countries and may continue to negatively affect global financial markets. While markets may improve, these factors have adversely affected NYSE Euronext’s revenues and operating income and may negatively impact future growth.

As a result of recent events, there has been, and it is likely that there will continue to be, significant change in the U.S. and European regulatory environment in which NYSE Euronext operates. Such regulatory reforms could adversely affect NYSE Euronext’s business or result in increased costs and the expenditure of significant resources.

While NYSE Euronext has not experienced reductions in its borrowing capacity, lenders in general have taken actions that indicate their concerns regarding liquidity in the marketplace. These actions have included reduced advance rates for certain security types, more stringent requirements for collateral eligibility and higher interest rates. Should lenders continue to take additional similar actions, the cost of conducting NYSE Euronext’s business may increase and its ability to implement its business initiatives could be limited. Also, an additional downgrade of U.S. Sovereign debt could result in incrementally higher borrowing costs.

NYSE Euronext expects that all of these factors will continue to impact its businesses. Any potential growth in the global cash markets in the upcoming months will likely be tempered by investor uncertainty resulting from volatility in the cost of energy and commodities, unemployment concerns, contagion concerns in relation to the sovereign debt issues faced by some countries around the world, as well as the general state of the world economy. NYSE Euronext continues to focus on its strategy to broaden and diversify its revenue streams, as well as its company-wide expense reduction initiatives in order to mitigate these uncertainties.

Sources of Revenues

Transaction and Clearing Fees

Our transaction and clearing fees consist of fees collected from our cash trading, derivatives trading and clearing businesses.

	•		Cash trading. Revenues for cash trading consist of transaction charges for executing trades on our cash markets, as well as transaction charges related to orders on our U.S. cash markets that are routed to other market centers for execution. Additionally, our U.S. cash markets pay fees to the SEC pursuant to Section 31 of the Exchange Act. These Section 31 fees are designed to recover the costs to the government of supervision and regulation of securities markets and securities professionals. Activity assessment fees are collected from member organizations executing trades on our U.S. cash markets, and are recognized when these amounts are invoiced. Fees received are included in cash at the time of receipt and, as required by law, the amount due to the SEC is remitted semiannually and recorded as an accrued liability until paid. The activity assessment fees are designed so that they are equal to the Section 31 fees. As a result, activity assessment fees and Section 31 fees do not have an impact on NYSE Euronext’s net income.
	•		Derivatives trading and clearing. Revenues from derivatives trading and clearing consist of per-contract fees for executing trades of derivatives contracts and clearing charges on the London market of NYSE Liffe and NYSE Liffe US and executing options contracts traded on NYSE Arca and NYSE Amex. Revenues from NYSE Liffe’s continental derivatives markets consist of per-contract fees for executing derivatives contracts. In some cases, these fees are subject to caps.

Revenues for per-contract fees are driven by the number of trades executed and fees charged per contract. The principal types of derivative contracts traded and cleared are equity and index products and short-term interest rate products. Trading in equity products is primarily driven by price volatility in equity markets and indices and trading in short-term interest rate products is primarily driven by volatility resulting from uncertainty over the direction of short-term interest rates. The level of trading and clearing activity for all products is also influenced by market conditions and other factors. See “— Factors Affecting Our Results.”

Market Data

We generate revenues from the dissemination of our market data in the U.S. and Europe to a variety of users. In the U.S., we collect market data fees principally for consortium-based data products and, to a lesser extent, for NYSE proprietary data products. Consortium-based data fees are dictated as part of the securities industry plans and charged to vendors based on their redistribution of data. Consortium-based data revenues from the dissemination of market data (net of administrative costs) are distributed to participating markets on the basis of a formula set by the SEC under Regulation NMS. Last sale prices and quotes in NYSE listed, NYSE Amex listed and NYSE Arca listed securities are disseminated through “Tape A” and “Tape B,” which constitute the majority of NYSE Euronext’s U.S. revenues from consortium-based market data revenues. We also receive a share of the revenues from “Tape C,” which represents data related to trading of certain securities that are listed on Nasdaq. These revenues are influenced by demand for the data by professional and nonprofessional subscribers. In addition, we receive fees for the display of data on television and for vendor access. Our proprietary products make market data available to subscribers covering activity that takes place solely on our U.S. markets, independent of activity on other markets. Our proprietary data products also include the sale of depth of book information, historical price information and corporate action information.

NYSE Euronext offers NYSE Realtime Reference Prices, which allows internet and media organizations to buy real-time, last-sale market data from NYSE and provide it broadly and free of charge to the public. CNBC, Google Finance and nyse.com display NYSE Realtime Reference Prices on their respective websites.

In Europe, we charge a variety of users, primarily the end-users, for the use of Euronext’s real-time market data services. We also collect annual license fees from vendors for the right to distribute Euronext market data to third parties and a service fee from vendors for direct connection to market data. A substantial majority of European market data revenues is derived from monthly end-user fees. We also derive revenues from selling historical and reference data about securities, and by publishing the daily official lists for the Euronext markets. The principal drivers of market data revenues are the number of end-users and the prices for data packages.

Listing

There are two types of fees applicable to companies listed on our U.S. and European securities exchanges — listing fees and annual fees. Listing fees consist of two components: original listing fees and fees related to other corporate-related actions. Original listing fees, subject to a minimum and maximum amount, are based on the number of shares that the company initially lists. Original listing fees, however, are generally not applicable to companies that transfer to one of our U.S. securities exchanges from another market, except for companies transferring to NYSE Amex from the over-the-counter market. Other corporate action related fees are paid by listed companies in connection with corporate actions involving the issuance of new shares to be listed, such as stock splits, rights issues, sales of additional securities, as well as mergers and acquisitions, which are subject to a minimum and maximum fee.

In the U.S., annual fees are charged based on the number of outstanding shares of the listed U.S. company at the end of the prior year. Non-U.S. companies pay fees based on the number of listed securities issued or held in the United States. Annual fees are recognized as revenue on a pro rata basis over the calendar year.

Original fees are recognized as revenue on a straight-line basis over estimated service periods of ten years for the NYSE and the Euronext cash equities markets and five years for NYSE Arca and NYSE Amex. Unamortized balances are recorded as deferred revenue on the condensed consolidated statements of financial condition.

Listing fees for our European markets comprise admission fees paid by issuers to list securities on the cash market, annual fees paid by companies whose financial instruments are listed on the cash market, and corporate activity and other fees, consisting primarily of fees charged by Euronext Paris and Euronext Lisbon for centralizing shares in IPOs and tender offers. Original listing fees, subject to a minimum and maximum amount, are based on the number of shares that the company initially lists. Revenues from annual listing fees relate to the number of shares outstanding and the market capitalization of the listed company.

In general, Euronext Paris, Euronext Amsterdam, Euronext Brussels and Euronext Lisbon have adopted a common set of listing fees. Under the harmonized fee book, domestic issuers (i.e., those from France, the Netherlands, Belgium and Portugal) pay admission fees to list their securities based on the market capitalization of the respective issuer. Subsequent listings of securities receive a discount on admission fees. Non-domestic companies listing in connection with raising capital are charged admission and annual fees on a similar basis, although they are charged lower maximum admission fees and annual fees. Non-domestic companies that are in the Euronext 100 index are treated as domestic. Euronext Paris and Euronext Lisbon also charge centralization fees for collecting and allocating retail investor orders in IPOs and tender offers.

The revenue NYSE Euronext derives from listing fees is primarily dependent on the number and size of new company listings as well as the level of other corporate-related activity of existing listed issuers. The number and size of new company listings and other corporate-related activity in any period depend primarily on factors outside of NYSE Euronext’s control, including general economic conditions in Europe and the United States (in particular, stock market conditions) and the success of competing stock exchanges in attracting and retaining listed companies.

Technology Services

Revenues are generated primarily from connectivity services related to the SFTI and FIX networks, software licenses and maintenance fees and strategic consulting services. Colocation revenue is recognized monthly over the life of the contract. We also generate revenues from software license contracts and maintenance agreements. We provide software that allows customers to receive comprehensive market-agnostic connectivity, transaction and data management solutions. Software license revenues are recognized at the time of client acceptance and maintenance agreement revenues are recognized monthly over the life of the maintenance term subsequent to acceptance. Expert consulting services are offered for customization or installation of the software and for general advisory services. Consulting revenue is generally billed in arrears on a time and materials basis, although customers sometimes prepay for blocks of consulting services in bulk. Customer specific software license revenue is recognized at the time of client acceptance. NYSE Euronext records revenues from subscription agreements on a pro rata basis over the life of the subscription agreements. The unrealized portions of invoiced subscription fees, maintenance fees and prepaid consulting fees are recorded as deferred revenue on the consolidated statements of financial condition.

Other Revenues

Other revenues include trading license fees, fees for facilities and other services provided to designated market markers (“DMMs”), brokers and clerks physically located on the floors of our U.S. markets that enable them to engage in the purchase and sale of securities on the trading floor, the results of our NYSE Blue business and fees for clearance and settlement activities in our European markets, as well as regulatory revenues. Regulatory fees are charged to member organizations of our U.S. securities exchanges.

Components of Expenses

Section 31 Fees

See “Sources of Revenues— Transaction and Clearing Fees” above.

Liquidity Payments, Routing and Clearing

We offer our customers a variety of liquidity payment structures, tailored to specific market, product and customer characteristics in order to attract order flow, enhance liquidity and promote use of our markets. We charge a “per share” or “per contract” execution fee to the market participant who takes the liquidity on certain of our trading platforms and, in turn, we pay, on certain of our markets, a portion of this “per share” or “per contract” execution fee to the market participant who provides the liquidity.

We also incur routing charges in the U.S. when we do not have the best bid or offer in the market for a security that a customer is trying to buy or sell on one of our U.S. securities exchanges. In that case, we route the customer’s order to the external market center that displays the best bid or offer. The external market center charges us a fee per share (denominated in tenths of a cent per share) for routing to its system. We include costs incurred due to erroneous trade execution within routing and clearing. Furthermore, NYSE Arca incurs clearance, brokerage and related transaction expenses, which primarily include costs incurred in self-clearing activities, and service fees paid per trade to exchanges for trade execution.

Other Operating Expenses

Other operating expenses include compensation, depreciation and amortization, systems and communications, professional services, selling, general and administrative, and merger expenses and exit costs.

   Compensation

Compensation expense includes employee salaries, incentive compensation (including stock-based compensation) and related benefits expense, including pension, medical, post-retirement medical and supplemental executive retirement plan (“SERP”) charges. Part-time help, primarily related to security personnel at the NYSE, is also recorded as part of compensation.

   Depreciation and Amortization

Depreciation and amortization expenses consist of costs from depreciating fixed assets (including computer hardware and capitalized software) and amortizing intangible assets over their estimated useful lives.

   Systems and Communications

Systems and communications expense includes costs for development and maintenance of trading, regulatory and administrative systems; investments in system capacity, reliability and security; and cost of network connectivity between our customers and data centers, as well as connectivity to various other market centers. Systems and communications expense also includes fees paid to third-party providers of networks and information technology resources, including fees for consulting, research and development services, software rental costs and licenses, hardware rental and related fees paid to third-party maintenance providers.

   Professional Services

Professional services expense includes consulting charges related to various technological and operational initiatives, including fees paid to LCH.Clearnet in connection with certain clearing guarantee arrangements and FINRA in connection with the transfer of certain member firm regulatory functions, as well as legal and audit fees.

   Selling, General and Administrative

Selling, general and administrative expenses include (i) occupancy costs; (ii) marketing costs consisting of advertising, printing and promotion expenses; (iii) insurance premiums, travel and entertainment expenses, co-branding, investor education and advertising expenses with NYSE listed companies; (iv) general and administrative expenses; and (v) regulatory fine income levied by NYSE Regulation. Regulatory fine income must be used for regulatory purposes. Subsequent to the July 30, 2007 asset purchase agreement with FINRA, the amount of regulatory fine income has been relatively immaterial.

   Merger Expenses and Exit Costs

Merger expenses and exit costs consist of severance costs and related curtailment losses, contract termination costs, depreciation charges triggered by the acceleration of certain fixed asset useful lives, as well as legal and other expenses directly attributable to business combinations and cost reduction initiatives.

Results of Operations

Three Months Ended September 30, 2011 Versus Three Months Ended September 30, 2010

The following table sets forth NYSE Euronext’s condensed consolidated statements of operations for the three months ended September 30, 2011 and 2010, as well as the percentage increase or decrease for each condensed consolidated statement of operations item for the three months ended September 30, 2011, as compared to such item for the three months ended September 30, 2010.

		Three months ended								Percent
		September 30,								Increase
(Dollars in Millions)		2011				2010				(Decrease)
Revenues
Transaction and clearing fees		$	904			$	726				25	%
Market data			93				94				(1	)%
Listing			113				105				8	%
Technology services			92				82				12	%
Other revenues			56				43				30	%
Total revenues			1,258				1,050				20	%
Transaction-based expenses:
Section 31 fees			109				77				42	%
Liquidity payments, routing and clearing			445				374				19	%
Total revenues, less transaction-based expenses			704				599				18	%
Other operating expenses:
Compensation			160				147				9	%
Depreciation and amortization			72				69				4	%
Systems and communications			46				52				(12	)%
Professional services			77				76				1	%
Selling, general and administrative			61				75				(19	)%
Merger expenses and exit costs			29				25				16	%
Total other operating expenses			445				444				—	%
Operating income			259				155				67	%
Interest expense			(31	)			(27	)			15	%
Investment income			2				1				100	%
Loss from associates			(2	)			(1	)			100	%
Other (loss) income			(1	)			—				(100	)%
Income before income taxes			227				128				77	%
Income tax provision			(21	)			(5	)			320	%
Net income			206				123				67	%
Net (income) loss attributable to noncontrolling interest			(6	)			5				220	%
Net income attributable to NYSE Euronext		$	200			$	128				56	%

Highlights

For the three months ended September 30, 2011, NYSE Euronext reported total revenues, less transaction-based expenses, operating income and net income attributable to NYSE Euronext of $704 million, $259 million and $200 million, respectively. This compares to total revenues, less transaction-based expenses, operating income and net income attributable to NYSE Euronext of $599 million, $155 million and $128 million, respectively, for the three months ended September 30, 2010.

The $105 million increase in total revenues, less transaction-based expenses, $104 million increase in operating income and $72 million increase in net income attributable to NYSE Euronext for the period reflect the following principal factors:

Increased total revenues, less transaction-based expenses — Total revenues, less transaction-based expenses, increased primarily due to increased average daily volume across all trading venues, the growth in our non-transaction-based revenues (including listing and technology services) as well as the favorable impact of foreign currency translation.

Increased operating income — The period-over-period increase in operating income of $104 million was primarily due to increased total revenues, less transaction-based expenses. Excluding the impact of foreign currency of $10 million, incremental costs associated with acquisitions and new business initiatives of $8 million and merger expenses and exit costs, our operating expenses decreased $21 million as compared to the three months ended September 30, 2010.

Increased net income attributable to NYSE Euronext — The period-over-period increase in net income attributable to NYSE Euronext of $72 million was mainly due to increased operating income. Our effective tax rate for the three months ended September 30, 2011 and 2010 was 9.5% and 4.0%, respectively, primarily due to discrete deferred tax benefits related to enacted reductions in the corporate tax rate in the United Kingdom from 28% to 27% in the 2010 period and from 27% to 25% in the 2011 period.

Segment Results

We operate under three reportable segments: Derivatives, Cash Trading and Listings, and Information Services and Technology Solutions. We evaluate the performance of our operating segments based on revenue and operating income. For discussion of these segments, see Note 4 to the condensed consolidated financial statements and “—Overview” above.

		Three months ended September 30,
										% of Total Revenues
Segment Revenues (in millions)		2011				2010				2011				2010
Derivatives		$	308			$	243				24	%			23	%
Cash Trading and Listings			825				694				66	%			66	%
Information Services and Technology Solutions			125				113				10	%			11	%
Total segment revenues		$	1,258			$	1,050				100	%			100	%

Derivatives

		Three months ended September 30,
										Increase				% of Revenues
(in millions)		2011				2010				(decrease)				2011				2010
Transaction and clearing fees		$	288			$	223				29	%			93	%			92	%
Market data			11				11				—	%			4	%			4	%
Other revenues			9				9				—	%			3	%			4	%
Total revenues			308				243				27	%			100	%			100	%
Transaction-based expenses:
Liquidity payments, routing and clearing			82				55				49	%			27	%			23	%
Total revenues, less transaction-based expenses			226				188				20	%			73	%			77	%
Total other operating expenses			98				100				(2	)%			32	%			41	%
Operating income		$	128			$	88				45	%			41	%			36	%

For the three months ended September 30, 2011, Derivatives operating income increased $40 million to $128 million, and operating income as a percentage of revenues in 2011 increased 5 percentage points to 41%. Compared to the third quarter of 2010, the $38 million increase in total revenues, less transaction-based expenses was driven by an increase of 14% in our average daily trading volume on our European markets, a 48% increase in our U.S. equity options contracts and the favorable impact of foreign currency translation. Compared to the third quarter of 2010, our average net revenue per contract decreased on both the U.S. and European platforms. Other operating expenses for the three months ended September 30, 2011 decreased $2 million reflecting modest operating efficiencies.

Cash Trading and Listings

		Three months ended September 30,
										Increase				% of Revenues
(in millions)		2011				2010				(decrease)				2011				2010
Transaction and clearing fees		$	616			$	503				22	%			74	%			73	%
Market data			49				52				(6	)%			6	%			7	%
Listing			113				105				8	%			14	%			15	%
Other revenues			47				34				38	%			6	%			5	%
Total revenues			825				694				19	%			100	%			100	%
Transaction-based expenses:
Section 31 fees			109				77				42	%			13	%			11	%
Liquidity payments, routing and clearing			363				319				14	%			44	%			46	%
Total revenues, less transaction-based expenses			353				298				18	%			43	%			43	%
Total other operating expenses			204				212				(4	)%			25	%			30	%
Operating income		$	149			$	86				73	%			18	%			13	%