This excerpt taken from the NDAQ 8-K filed Feb 20, 2008.
Agreements have previously been made with an external party regarding the provision of OMX shares, known as equity swaps. The agreements are valid until June 30, 2009 and at September 30, 2007 correspond to approximately 350,000 shares at an agreed average price of approximately SEK 203.
The equity swap agreements cover the portion of outstanding employee stock options that are currently deemed likely to be exercised, and the portion of shares that are expected to be allotted at the end of the OMX Share Match Program.
OMX continuously pays interest compensation to the counterparty in exchange for the counterparty undertaking to provide the shares. Interest compensation in the agreement corresponds to the net amount of interest expenses on the underlying value of the shares when the agreement was signed and the dividend on the underlying shares. Interest expenses are based on a Stockholm Interbank Offered Rate of 90 days.
Changes in OMXs share price affect the value of the equity swap. These changes in fair value of the equity swap designated for hedging employee stock options are reported in the income statement. The equity swap designated for hedging share match program is reported as an equity instrument in accordance with IFRS. For 2006, the net effect on the income statement resulted in a SEK 15 million increase to net income. For the first nine months of 2007, the effect on profit and loss was SEK 2 million.