© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 1 The NASDAQ Stock Market Jeff Singer Vice President December 7, 2005

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 2 The NASDAQ Overview Four lines of Businesses: Nasdaq in presence in CT: 1.Security Listing 2.Transaction 3.Market Information 4.Financial Products 43 companies; predominately in Fairfield County Financial, Industrial, IT, and Health care are strongest sectors People’s Bank, Silgan, and United Natural Foods are the 3 largest companies ~ 300 employees in Trumbull, CT

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 3 How did we get here?

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 4 The Evolution of The NASDAQ Stock Market First trading day on February 8th, with quotes on 2,500 securities Apple and Microsoft list on NASDAQ / 1996 First market to launch television advertising campaign and WebSite Decimalization & SEC Regulation NMS 1981

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 5 Relative quoted spread is the difference between the inside bid and ask for each trade averaged for the month. Contains all NASDAQ National Market stocks and all NYSE issues. Source: NASDAQ Economic Research. Decimalization and technology enhancements have reduced transaction costs Manning Rules Order Handling Rules (Limit Order Display, ECN Integration) 1/16 Quote Integration SelectNet Enhancements Launch of SuperSoes SuperMontage Decimalization Historic Spreads and NASDAQ Market Improvements NASDAQ Market Center

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 6 How Decimalization Changed the Markets 1.The number of entry points to buy/sell increased 525% 2.Created incentive to “Step Ahead” 3.Required Large orders to be broken up, and 4.Order depth became less transparent 5.Use of electronic trading increased (60% of fund managers now use algorithmic trading) 6.Investors saved $$ 7.Intermediaries lost money 500 to 260 market makers for NASDAQ 25 to 7 specialists on NYSE Charging service fees and other fees to recoup lost trading margins

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 7 Decimalization’s Impact on NASDAQ: Transaction Rates up 25-fold Average daily Volume remains unchanged

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 8 Next Major Change: SEC’s Reg NMS Reforms  February 25, 2004: The SEC publishes Reg NMS (National Market System) proposal. Features of the proposal include: sub-penny trading, market access, trade-through and market data pricing.  February 2005: Manual markets begin to communicate their transition to an electronic model.  April 6, 2005: The SEC approves Reg NMS, a reform designed to interlink domestic exchanges/markets to enhance competition and provide equal market access for all market participants. Floor-Based Trading to Emulate NASDAQ’s Electronic Model REg NMS Clip

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 9 Total NYSE Market Share is Declining even before Reg NMS Source: NYSEData.com. Reflects market share of consolidated tape volume. Off-floor Includes all volume in NYSE- listed securities not reported by the NYSE Market share in trading of NYSE listed stocks Source: NASDAQ Data includes NASDAQ, Brut, ARCA, INET, and other electronic venues. Does not include routing. NYSE Market Share Off-Floor Electronic Markets

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 10  $934.5mm cash acquisition announced April 22, 2005  Deal, cleared by DOJ and expected to close this year, will provide:  Superior execution opportunities for customers  Consolidation on to one trading platform in same timeframe as standalone  Efficient combined company with low cost structure to deliver returns to investors  Platform for future innovation and growth  Strong competitor in post NMS world  $190mm cash acquisition of Brut in September 2004  Brut acquisition had a significant impact:  Provided deeper pools of liquidity and routing to other liquidity pools  Direct connectivity with customers who did not historically access the NASDAQ system  Enhanced routing capabilities, including routing for listed securities  Combined order books of the NASDAQ Market Center and Brut, giving customers the benefit of one liquidity pool  Synergies further strengthen operating margins and profitability NASDAQ Consolidates Marketplaces Consolidation -- Efficiency -- Competition

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 11 What does market structure mean to you? Market Reaction On November 17, 2004, Kmart Holding Corporation and Sears, Roebuck and Co agreed to merge. Quoted Spread November 17, 2004 KMART SEARS On the day of the merger announcement, Kmart’s spread traded in a narrow band between $0.00 and $0.12, while Sears’ spread ranged from $0.01 to $0.57. (Cents) Sears Trade Halt Source: NASDAQ Economic Research Sears Share Volume November 17, 2004Sears Share Volume October 2004 NASDAQ AND OTHER OFF-BOARDNYSE

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 12 WHERE NASDAQ IS TODAY

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 13 SHARES EXECUTED AT OR INSIDE THE QUOTE 82.3%91.4% 80.7%91.8% 82.0%91.8% EFFECTIVE SPREADS (Cents) SPEED (Seconds) NYSENASDAQ S&P 500 Stocks Dow Jones US Large Cap Index Stocks Russell 1000 Stocks Independent, Third-party Execution Quality Statistics as mandated by SEC Rule 11Ac1-5. Averages are share-weighted. Includes all domestic common stocks on NASDAQ National Market and NYSE. Data represent all marketable orders less than 10,000 shares traded by Primary Market only. Source: Market Systems, Inc., 01/ NYSENASDAQNYSENASDAQ Stocks of All Sizes Trade Better on NASDAQ Investors on NASDAQ are more likely to get the prices they are quoted, or better, and pay lower transaction costs. In Summary NASDAQ’s Speeds are 3.7x Faster NASDAQ’s Spreads are 0.62¢ Cheaper NASDAQ’s Executions are 10% Better

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 14 NASDAQ IS A Market of Industry Leaders Health Care Information Technology Financials Telecom Industrials Energy & Utilities Consumer Materials NASDAQ is home to category-defining companies drawn from all sectors of the economy. By number of companies. Consumer is consumer discretionary and consumer staples. Source: FactSet Research Systems, Inc. 10/2005. NASDAQ’s 3,200 Listed Companies Health Care Consumer Industrials Financials Information Technology Telecom

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 15 NASDAQ Continues Momentum in 2005 NASDAQ continues to dominate IPO listings, reduce switches, and build the Dual List program IPO section: Includes domestic and foreign IPOs (NNM and SCM), best-efforts and bank demutualizations. Excludes unit investment trusts and fully classified closed-end funds.Does not include ARCX IPOs for 2004 (1 company). Source: NASDAQ, EquiDesk. Data as of 11/31/2005. Number of IPOs by Market ► NASDAQ has captured 59% of the IPO market in ► NASDAQ has successfully switched 4 companies from the NYSE in 2005 – Sears Holdings, Cadence Design Systems, Tasty Baking, and Nashua Corporation. ► A total of 8 companies are currently dual listed on NASDAQ. In 2005, 3 additional companies; Chicago Mercantile Exchange, Nuveen, and Harmony Gold Mining Company, have joined the Dual List program. Number of Companies that Switched per Year Dual List Program

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 16 And most recently… BRUT Acquisition 2004 Sears Holdings lists with NASDAQ after a 100-year history with NYSE Jet Blue

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 17 Conclusion 1.MARKETS ARE EVOLVING 2.MARKETS FAVOR INNOVATORS

© Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved. 18 Jeffrey H. Singer Regional Vice President, NASDAQ (212) © Copyright 2005, The Nasdaq Stock Market, Inc. All rights reserved.