© Copyright 2006, The Nasdaq Stock Market, Inc. All rights reserved. © Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. INTERNATIONAL

© Copyright 2006, The Nasdaq Stock Market, Inc. All rights reserved.© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved.

INTERNATIONAL SECURITIES EXCHANGES:THE STOCK MARKET OF THE FUTURE

April 5, 2006

© Copyright 2006, The Nasdaq Stock Market, Inc. All rights reserved.

Cautionary Note Regarding Forward-Looking Statements

The matters described herein may contain forward-looking statements that are made pursuant to the Safe

Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements

involve a number of risks, uncertainties or other factors beyond the control of The NASDAQ Stock Market,

Inc. (the “Company”), which could cause actual results to differ materially from historical results,

performance or other expectations and from any opinions or statements expressed or implied with respect to

future periods. These factors include, but are not limited to, the Company's ability to implement its strategic

initiatives, the integration of the INET trading system, economic, political and market conditions and

fluctuations, government and industry regulation, including any Regulation NMS changes, interest rate risk,

U.S. and global competition, and other factors detailed in the Company's annual report on Form 10-K, and

periodic reports filed with the U.S. Securities and Exchange Commission. We undertake no obligation to

release any revisions to any forward-looking statements.


KEY DEVELOPMENTS

Several important developments in the last year are helping define the future of the

equity exchange industry:

• Acquisitions

• Regulation NMS

• Enhancements in trading technology

• Nasdaq’s registration as a securities exchange


KEY DEVELOPMENTS (continued)

Acquisitions: Nasdaq acquired the INET ECN in December 2005. The NYSE

acquired Archipelago in March 2006.

Regulation NMS: Adopted by the SEC in 2005 and scheduled to become effective in

stages throughout 2006, Regulation NMS has been one of the key drivers behind the

changes in execution services and market data in the United States.

Continuing Improvements in Trading Technology: Nasdaq continues to leverage

its technology to provide innovative services.

Exchange Registration: Nasdaq’s registration as a securities exchange enables us

to complete our separation from our regulator, the NASD, establishing the “best

practice” governance model for all U.S. exchanges.


ACQUISITIONS

On December 8, 2005, Nasdaq completed the acquisition of the INET ECN. The

INET acquisition will:

• enable us to enhance our premier electronic equities market

• provide superior execution opportunities for our customers

Key benefits that we expect from the INET acquisition include:

• lower cost trading system

• highly scalable technology platform

• increased liquidity for securities listed on Nasdaq, NYSE and Amex

• competitive advantage on listings

• greater market information based on increased liquidity


KEY BENEFITS OF THE INET ACQUISITION

• Lower cost trading system: We plan to migrate the Nasdaq Market Center

to INET’s lower-cost, technologically advanced, fast and reliable trading

platform in the fourth quarter of 2006.

• Highly scalable technology platform: The INET platform is readily

positioned to take advantage of new rules, such as Regulation NMS, that

favor automated trading systems over traditional, manual securities

exchanges. We believe that our market model, together with INET’s tested

and market accepted technology, will successfully compete against other

proposed, but untested, hybrid trading systems that combine an existing

manual trading floor with a new electronic trading platform. In addition,

because the INET platform is highly scalable, we believe that we are well-

positioned to handle increased transaction volumes at low incremental costs.


KEY BENEFITS OF THE INET ACQUISITION (continued)

• Increased liquidity for securities listed on Nasdaq, NYSE and

Amex: The depth and liquidity that we offer benefit our existing customers

by attracting additional customers, who, in turn, provide further liquidity for all

our customers. Fully electronic trading could have significant speed and

cost advantages for investors over trading systems that switch between

automatic and slower manual trading, such as the hybrid trading systems

proposed by the NYSE and Amex, and may result in opportunities for us to

increase our share of trading in non-Nasdaq-listed securities.


KEY BENEFITS OF THE INET ACQUISITION (continued)

• Competitive advantage on listings: We expect the INET acquisition to

enhance our ability to compete for the listing of securities. We believe that

companies consider the depth, liquidity and trading patterns in deciding where

to list their securities. By creating the largest single alternative pool of liquidity

for non-Nasdaq-listed securities through the INET acquisition, we hope to

encourage additional companies to switch their listings to Nasdaq. (We also

recently announced the highest listing standards in the world, which should

attract companies seeking to signal their commitment to these standards.)

• Greater market information based on increased liquidity: We expect

increased liquidity as a result of the INET acquisition will generate a broader

set of market information that we can use to create new and more

comprehensive market data products.


REGULATION NMS

Regulation NMS, which becomes effective in stages throughout 2006, has been one

of the key drivers behind the changes in execution services and market data in the

United States.

The most significant provisions of Regulation NMS:

• order protection, or “best price” rule

• fair access rule

• market information rule

• subpenny rule


REGULATION NMS (continued)

Under the best price rule, each exchange must interact with the market center offering

the best automated quote before it can execute a trade at an inferior price on its

systems.

• Nasdaq is well positioned to benefit because it has long been a fully automated

market and the INET acquisition provides an additional liquidity pool.

• Increased automated trading, which the rule encourages, will result in increased

overall average daily trading volumes in securities listed on other exchanges.

• We have announced plans to withdraw from the Intermarket Trading System and

to rely instead upon faster private linkages with greater capacity to comply with

the order protection and fair access rules.



The fair access rule requires market centers to provide fair and non-discriminatory

access to quotations, establishes a limit on access fees to harmonize the pricing of

quotations across different trading centers and requires all exchanges to maintain

written rules that prohibit their members from displaying quotations that lock or cross

automated quotations.

We expect this rule will benefit Nasdaq because:

• we already have fast and reliable automated access into all market centers

• we have the logic that will permit compliance with locking or crossing automatic

quotations



Regulation NMS also contains a market information rule:

• updates the requirements for consolidating, distributing and displaying

market information

• amends the CTA/CQ and UTP Plans for disseminating market information to

modify the formulas for allocating plan revenues and to broaden participation

in plan governance

The sub-penny rule prohibits market participants from displaying quotations in pricing

increments smaller than a penny, with exceptions for quotes and orders priced at less

than $1.00 per share.

We do not expect either of these rules to have a significant impact on Nasdaq.


TECHNOLOGY

Nasdaq is leveraging its technology to provide innovative services that address the

needs of the marketplace, such as Nasdaq Opening Cross and Closing Cross.

The Opening Cross and Closing Cross further establish us as the reference

point for trading in Nasdaq-listed securities, which has drawn liquidity to our

market at the opening and closing times and has the potential to draw additional

liquidity to our market during the trading day.


TECHNOLOGY (continued)

• We intend to introduce the Nasdaq intraday cross in 2006, which will provide

customers and investors with a highly efficient and accurate single price at

specific times during the trading day, resulting in an enhanced ability to

discover larger pools of liquidity. The introduction of the intraday cross will

serve as a further illustration of our advanced technology and our position as

an industry innovator.

• Our current order technology allows market participants to utilize a number

of complex, self-executing order types.


EXCHANGE REGISTRATION

On January 13, 2006, the SEC approved our application for registration as a national

securities exchange.

After we begin to operate as an exchange, the NASD will no longer have voting

control over us, effectively establishing it as an independent third-party regulator. We

strongly believe that this is the model other exchanges should emulate in order to

enhance investor confidence in the integrity of all U.S. financial markets.


CONCLUSION

Our industry is entering a period of transition across global markets for various

financial products. We believe that our past acquisition experience positions us to

strategically enter new markets that complement our core competencies, build upon

the Nasdaq brand name and advance our technology both in the United States and

abroad.

Documents

© Copyright 2006, The Nasdaq Stock Market, Inc. All rights reserved. © Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. INTERNATIONAL