UNITED STATES SECURITIES and EXCHANGE COMMISSION Washington, D.C

UNITED STATES SECURITIES and EXCHANGE COMMISSION Washington, D.C

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from ________ to _______ Commission file number 000-32651 The Nasdaq Stock Market, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 52-1165937 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) One Liberty Plaza New York, New York 10006 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code: (212) 401-8742 Securities registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share (Title of class) 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 x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No o As of June 30, 2003 the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates was $276,882,036 (this amount represents 34,395,284 shares of Nasdaq’s common stock (the “Common Stock”) based on the last reported price of $8.05 of the Common Stock on the OTC Bulletin Board on such date). On March 8, 2004, 78,516,375 shares of the registrant’s Common Stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s proxy statement for the annual stockholders’ meeting to be held in 2004 are incorporated by reference into Part III. TABLE OF CONTENTS Page Part I. Item 1. Business 1 Item 2. Properties 33 Item 3. Legal Proceedings 33 Item 4. Submission of Matters to a Vote of Security Holders 33 Part II. Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters 34 Item 6. Selected Consolidated Financial Data 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 63 Item 8. Financial Statements and Supplementary Data 63 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 63 Item 9A. Controls and Procedures 63 Part III. Item 10. Directors and Executive Officers of the Registrant 64 Item 11. Executive Compensation 64 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 64 Item 13. Certain Relationships and Related Transactions 64 Item 14. Principal Accountant Fees and Services 64 Part IV. Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 65 Certain statements in this annual report on Form 10-K contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, The Nasdaq Stock Market, Inc.’s (“Nasdaq”) ability to implement its strategic initiatives, competition, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk and other factors. Most of these factors are difficult to predict accurately and are generally beyond Nasdaq’s control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of December 31, 2003. Readers should carefully review this annual report in its entirety, including but not limited to Nasdaq’s financial statements and the notes thereto and the risks described in “Item 1. Business—Risk Factors.” Except for Nasdaq’s ongoing obligations to disclose material information under the Federal securities laws, Nasdaq undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, Nasdaq claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Part I Item 1. Business. Nasdaq Overview Nasdaq® operates The Nasdaq Stock Market®, the largest electronic screen-based equity securities market in the United States. Since its inception in 1971, Nasdaq has been a leader in utilizing technology to democratize and extend the reach of the securities markets. In 2003, Nasdaq changed its organization structure from operating in one segment to operating in two segments. Nasdaq’s two segments are managed and operated as strategic business units and organized by products and services. Nasdaq’s products and services are grouped in the following segments: Market Services Segment. For the year ended December 31, 2003, Market Services accounted for revenues of $383.1 million, which represented 65.0% of Nasdaq’s total revenues. · Transaction Services includes collecting, processing and disseminating price quotes of Nasdaq-listed securities, the routing and execution of buy and sell orders for securities listed on The Nasdaq Stock Market and securities listed on national stock exchanges and transaction reporting services. Market participants in The Nasdaq Stock Market, consisting of market makers, electronic communication networks (“ECNs”), registered stock exchanges and order entry firms, each of which is described below, are the users of Nasdaq’s Transaction Services. For the year ended December 31, 2003, Transaction Services accounted for revenues of $236.0 million, which represented 40.0% of Nasdaq’s total revenues. See “—Products and Services—Market Services—Transaction Services” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” · Market Information Services primarily provides quote and trade information to data vendors, who in turn sell the information to the public. For the year ended December 31, 2003, Market Information Services accounted for revenues of $147.1 million, which represented 24.9% of Nasdaq’s total revenues. See “—Products and Services—Market Services—Market Information Services” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 1 Issuer Services Segment. For the year ended December 31, 2003, Issuer Services accounted for revenues of $200.2 million, which represented 33.9% of Nasdaq’s total revenues. · Corporate Client Group provides customer services and information products to Nasdaq-listed companies and is responsible for obtaining new listings on The Nasdaq Stock Market. For the year ended December 31, 2003, the Corporate Client Group accounted for revenues of $167.3 million, which represented 28.4% of Nasdaq’s total revenues. See “—Products and Services—Issuer Services—Corporate Client Group” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” · Nasdaq Financial Products is responsible for introducing products that extend and enhance the Nasdaq brand. This sub-segment oversees the development and marketing of new Nasdaq financial products and associated derivatives, the licensing and listing of third party structured products and the listing of third-party sponsored exchange traded funds. For the year ended December 31, 2003, Nasdaq Financial Products accounted for revenues of $32.9 million, which represented 5.6% of Nasdaq’s total revenues. See “—Products and Services—Issuer Services—Nasdaq Financial Products” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In June 2003, Nasdaq announced the results of a strategic review of all its operations designed to position Nasdaq for improved profitability and growth. This strategic review included the elimination of non-core products and initiatives and resulted in a reduction in Nasdaq’s work force. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” This business section reflects this strategic review and explains Nasdaq’s current mix of products and services. Nasdaq’s market model is one of “open architecture.” As a fully electronic market, The Nasdaq Stock Market does not have a central

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