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Tuesday 12 December, 2006

NASDAQ Stock Market

Form 8-K

NASDAQ Stock Market, Inc. (The)
12 December 2006

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                Date of Report (Date of earliest event reported): 
                      December 11, 2006 (December 11, 2006)
                                
                         THE NASDAQ STOCK MARKET, INC.
               (Exact name of Registrant as Specified in Charter)

          Delaware                     000-32651                52-1165937
(State or Other Jurisdiction   (Commission File Number)       (IRS Employer
      of Incorporation)                                    Identification No.)

                  One Liberty Plaza, New York, New York 10006
              (Address of Principal Executive Offices) (Zip Code)

       Registrant's telephone number, including area code: (212) 401-8700


Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Company under any of the
following provisions:

• Written communications pursuant to Rule 425 under the Securities Act (17 CFR
  230.425)
• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
  240.14a-12)
• Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
  Act (17 CFR 240.14d-2(b))
• Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
  Act (17 CFR 240.13e-4(c))


Item 8.01. Other Events.

The risk factors and other disclosure attached as Exhibit 99.1 hereto is being
filed for the purposes of incorporation by reference into The Nasdaq Stock
Market, Inc.'s (the 'Company') shelf registration statements in order to update
the Company's disclosure and for the information of the Company's existing and
prospective stockholders.


Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

      99.1 Risk factors and other disclosure

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, The Nasdaq
Stock Market, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Dated: December 11, 2006      THE NASDAQ STOCK MARKET, INC.

                              By:   /s/ Edward S. Knight
                                    Edward S. Knight
                                    Executive Vice President and General Counsel



                                                                    EXHIBIT 99.1

                              RECENT DEVELOPMENTS

On November 20, 2006, we announced the terms of offers to acquire all of the
outstanding equity interests (other than shares currently owned by us) of London
Stock Exchange Group plc, or LSE, and we requested a meeting with LSE's
chairman. The terms included an offer to acquire all of the outstanding ordinary
shares of LSE for £12.43 per share and all of the outstanding B shares of LSE
for £2.00 per share (plus an amount equal to accrued dividends). Later that same
day, LSE announced that its board was rejecting our offers and our request for a
meeting. Notwithstanding this rejection by LSE's board, we intend to make the
offers directly to LSE's shareholders. We intend to finance the acquisition by
borrowing up to $5.1 billion (a portion of which would be used to repay our
existing senior secured indebtedness in full) and issuing $775.0 million of
preferred stock. For a discussion of risks associated with the proposed LSE
acquisition, including risks associated with the required level of financing,
the impact on our stock price and demands on management, see 'Risk Factors.'


                                  RISK FACTORS

Our high leverage limits our financial flexibility.

We have a significant amount of debt. Our indebtedness as of November 30, 2006
was approximately $1.5 billion and we may borrow up to an additional $75.0
million. In addition, we have arranged for $5.1 billion of debt financing to
become available in connection with the consummation of the proposed LSE
acquisition, a portion of which would be used to repay our existing senior
secured indebtedness in full. This significant leverage may:

    • impair our ability to obtain additional financing in the future for
      refinancing indebtedness, acquisitions, working capital, capital 
      expenditures, or other purposes;
    • reduce funds available to us for our operations and general corporate 
      purposes or for capital expenditures as a result of the dedication of a 
      substantial portion of our consolidated cash flow from operations to the 
      payment of principal and interest on our indebtedness;
    • place us at a competitive disadvantage compared with our competitors with 
      less debt;
    • increase our vulnerability to a downturn in general economic conditions; 
      and
    • curtail our flexibility to respond to changing economic or competitive
      conditions or to make acquisitions.

Our significant debt resulted in the downgrading of our credit rating by Moody's
and by Standard & Poor's in May 2006. In addition, on November 28, 2006, as a
result of the significant debt we will incur in connection with the proposed LSE
acquisition, Standard & Poor's cut our long-term counterparty credit rating to
BB from BB+.

In addition, the covenants in our credit facilities, as well as the credit
facilities we have entered into in connection with financing the proposed LSE
acquisition, restrict our ability to grant liens, incur additional indebtedness,
pay dividends, sell assets, make certain payments, conduct transactions with
affiliates and merge or consolidate. Our convertible notes also contain a
covenant restricting our ability to incur senior debt and as a consequence of
the current debt outstanding under our credit facilities, our convertible notes
would not permit us to incur additional senior debt.


Future acquisitions, partnerships and joint ventures may require, and the
proposed LSE acquisition will require, significant resources and/or result in
significant unanticipated losses, costs or liabilities.

Over the past three years, acquisitions including the acquisitions of INET and
Nasdaq Execution Services, LLC (formerly Brut, LLC) and the proposed LSE
acquisition, have been a significant factor in our growth. Although we cannot
predict our rate of growth as the result of acquisitions, we believe that
additional acquisitions or entering into partnership and joint ventures are
important to our growth strategy. Many of the other potential purchasers of
assets in our industry have greater financial resources than we have. Therefore,
we cannot be sure that we will be able to complete future acquisitions on terms
favorable to us.

We may finance future acquisitions by issuing additional equity and/or debt,
including the proposed LSE acquisition which we intend to finance with debt and
equity. In connection with the proposed LSE acquisition, we have entered into
finance arrangements pursuant to which we will borrow up to $5.1 billion (a
portion of which would be used to repay our existing senior secured indebtedness
in full) and issue up to $775.0 million of preferred stock. The issuance of
additional equity in connection with any transaction could be substantially
dilutive to existing stockholders. The issuance of additional debt could
increase our leverage substantially and, in the case of the proposed LSE
acquisition, will increase our leverage substantially. In addition, announcement
or implementation of future transactions by us or others could have a material
effect on the price of our stock. We could face financial risks associated with
incurring additional debt, particularly if the debt resulted in significant
incremental leverage. Additional debt may reduce our liquidity, curtail our
access to financing markets, impact our standing with the credit agencies and
increase the cash flow required for debt service. Any incremental debt incurred
to finance an acquisition, including the proposed LSE acquisition which we
intend to finance with debt and equity, could also place significant constraints
on the operation of our business. The credit facility we have entered into in
connection with the proposed LSE acquisition imposes certain restrictions on
future acquisitions. We may not be able to meet those restrictions.

These equity, debt and managerial commitments may impair the operation of our
businesses. Furthermore, any future acquisitions of businesses or facilities
could entail a number of additional risks, including:

    • problems with effective integration of operations;
    • the inability to maintain key pre-acquisition business relationships;
    • increased operating costs;
    • the diversion of our management team from our other operations;
    • problems with regulatory bodies;
    • exposure to unanticipated liabilities;
    • difficulties in realizing projected efficiencies, synergies and cost 
      savings;
    • possible tax costs or inefficiencies associated with a future acquisition; 
      and
    • changes in our credit rating and financing costs.


We must continue to invest in our operations to integrate prior transactions and
to maintain and grow our business, and we may need additional funds to do so.

We depend on the availability of adequate capital to maintain and develop our
business. We believe that we can meet our current capital requirements from
internally generated funds, cash on hand and available borrowings. However, if
we are unable to fund our capital requirements as currently planned, there would
be a material adverse effect on our business, financial condition and operating
results.

Should we need to raise funds through incurring additional debt, we may become
subject to covenants even more restrictive than those contained in our current
debt instruments. In the event we consummate the proposed LSE acquisition, the
credit agreements we have entered contain covenants even more restrictive than
those contained in our current debt instruments. Furthermore, if we issue
additional equity our equity holders may suffer dilution. There can be no
assurance that additional capital will be available on a timely basis, on
favorable terms or at all.

We continue the process of integrating INET into our operations. The final
aspect of integration - the transfer of non-Nasdaq listed securities from our
legacy execution system to the INET platform - is scheduled for the first
quarter of 2007. We do not believe that this final aspect of integration is
material to the overall integration of INET.


The regulatory framework under which we operate and new regulatory requirements
or new interpretations of existing regulatory requirements could require
substantial time and resources for compliance, which could make it difficult and
costly for us to operate our business.

In recent years, the securities trading industry and, in particular, the
securities markets, have been subject to significant regulatory changes.
Moreover, the securities markets have been the subject of increasing
governmental and public scrutiny in response to a number of recent developments 
and inquiries. Any of these factors or events may result in future regulatory or 
other changes, although we cannot predict the nature of these changes or their 
impact on our business at this time.

Under current U.S. federal securities laws, changes in our rules and operations,
including our pricing structure, must be reviewed, and in many cases explicitly
approved, by the SEC. The SEC may approve, disapprove, or recommend changes to
proposals that we submit. In addition, the SEC may delay the initiation of the
public comment process or the approval process.


We face significant competition in our business.

The securities trading business is highly competitive. We face competition from
numerous entities in the securities trading industry, including competition for
listings and trading services from other exchanges and market centers. Such
competition also includes pricing competition. In addition, competition could
increase as a result of the registration of new exchanges in the United States
and globalization in the industry. The following factors are some of the risks
associated with competition that may affect our business and results of
operations:


Price competition has affected and could continue to affect our business.

The securities trading industry is characterized by intense price competition.
We have in the past lowered prices and increased rebates to attempt to gain
market share. These strategies have not always been successful and have at times
hurt operating performance. Additionally, we have also been, and may once again
be, required to adjust pricing to respond to actions by competitors, which has
adversely impacted operating results. We have recently taken steps to
rationalize our pricing. This rationalization of our pricing may adversely
affect our market share.

Price competition with respect to market data rebates or our program relating to
sharing revenues associated with trading Nasdaq-listed securities could attract
trading volume away from us, leading to loss of market share and decreased
revenues.


Globalization, growth, consolidations and other strategic arrangements may
impair our competitive position.

The liberalization and globalization of world markets have resulted in greater
mobility of capital, greater international participation in local markets and
more competition among markets in different geographical areas. As a result, the
competition among U.S.-based and non-U.S.-based markets and other execution
venues has become more intense.

In addition, in the last several years, the structure of the securities industry
has changed significantly through demutualizations and consolidations. In
response to growing competition, many marketplaces in both Europe and the United
States have demutualized to provide greater flexibility for future growth. The
securities industry is also experiencing consolidation, creating a more intense
competitive environment. Also, a high proportion of business in the securities
market is becoming increasingly concentrated in a smaller number of institutions
and our revenue may therefore become concentrated in a smaller number of
customers.


We face competition from new competitors in the securities trading industry.
Examples of these new competitors include:

    • The Boston Stock Exchange, Inc., the Chicago Stock Exchange, Inc., the
      Philadelphia Stock Exchange, Inc, the National Stock Exchange and the
      International Stock Exchange have all recently entered into investment
      agreements with other participants in the securities industry, with the
      objective of enabling them to better compete with other exchanges;
    • Knight Capital Group, Inc., a market maker in Nasdaq-listed securities, 
      has acquired Attain ECN, a Nasdaq competitor;
    • TradeBot Systems launched the BATS ECN;
    • Citigroup Inc. announced plans to launch its own electronic stock-trading
      network from its acquisition of OnTrade Inc., an ECN previously operated 
      by NexTrade Holdings Inc.;
    • NYSE's potential entry in trading Nasdaq-listed securities;
    • ISE began trading cash equities; and
    • Philadelphia Stock Exchange recently began trading Nasdaq-listed 
      securities.

Because of these market trends, we face intense competition. If we are unable to
compete successfully in this environment, our business, financial condition and
operating results will be adversely affected.

In addition, we believe Regulation NMS may enhance competition in Nasdaq-listed
securities from these or other new competitors. Additionally, new ECNs may
develop trading platforms that are more competitive than ours. Finally, there
has been increased use of electronic trading systems specializing in large
volume trades, such as LiquidNet, Pipeline Trading and Investment Technology
Group's POSIT platform, which may divert trading volume from The Nasdaq Market
Center. If these or other trading venues are successful, our business, financial
condition and operating results could be adversely affected. Also, our trade
reporting facility (which we operate jointly with the NASD for the purpose of
accepting reports of off-exchange trades) faces competition from the trade
reporting facilities operated jointly with NASD by the National Stock Exchange,
and soon, the Boston Stock Exchange and NYSE.


Recent mergers and acquisitions activity of NYSE.

The recent merger of NYSE and Archipelago as well as the NYSE's announced merger
with Euronext will create strong competition for us, particularly if NYSE is
able to create its own electronic trading platform or migrate its trading
business to Archipelago's platform and if NYSE is able to attract new overseas
listings. NYSE is developing electronic trading capabilities that will compete
directly with ours. In addition, the merger with Archipelago has given NYSE
access to ArcaEx's electronic systems. If NYSE's trading volume increases to our
detriment as a result of the merger with Archipelago, it would have a negative
impact on our business, financial condition and operating results. In addition,
the proposed merger of NYSE and Euronext could result in a stronger competitor
for us than NYSE and Euronext as stand-alone businesses. If the NYSE/Euronext
merger is consummated and they are able to compete for additional overseas
listings to our detriment, it would have a negative impact on our business,
financial condition and operating results.


We face significant competition in our securities trading business, which could
reduce our transactions, trade reporting and market information revenues and
negatively impact our financial results.

We compete for trading of Nasdaq-, NYSE- and Amex-listed securities. Any
decision by market participants to quote, execute or report trades through
exchanges, ECNs or the Alternative Display Facility maintained by NASD could
have a negative impact on our share of quotes and trades in securities traded
through The Nasdaq Market Center.

While we trade a large percentage of securities of Nasdaq-listed companies, we
face strong competition from other exchanges and emerging players in the market.
For non-Nasdaq-listed securities, the other national exchanges offer greater
liquidity in more non-Nasdaq-listed securities than we do. Accordingly, we face
major obstacles in trying to attract trading volume in non-Nasdaq-listed
securities.

Our responses to competition may not be sufficient to regain lost business or
prevent other market participants from shifting some of their quoting and/or
trade reporting to other industry participants. We may need to reduce prices to
remain competitive. Our inability to compete for transactions, trade reporting
and market information revenues could have an adverse effect on our business,
financial condition and operating results.


We must adapt to significant competition in our listing businesses.

We face significant competition in our listing businesses from other exchanges
both in the United States and internationally. Historically, NYSE has been our
largest competitor, and we have competed with NYSE primarily for listings of
larger domestic and international companies. In addition, on occasion, issuers
may transfer their listings from us to other venues. Significant transfers could
have a material adverse effect on our financial results.


Our revenues may be affected by competition in the business for financial
products.

We have grown our financial products business, which creates indexes and
licenses them for Nasdaq-branded financial products. Nasdaq-sponsored financial
products are subject to intense competition from other exchange traded funds, or
ETFs, derivatives and structured products as investment alternatives. Our
revenues may be adversely affected by increasing competition from competitors' 
financial products designed to replicate or correlate with the performance of 
our financial products. In addition, the legal and regulatory climate, which 
supports the licensing of these financial products, has changed in a manner 
which is likely to adversely impact our ability to successfully license our 
products. In September 2005, the U.S. District Court for the Southern District 
of New York dismissed actions brought by McGraw-Hill and Dow Jones against an 
options market that threatened to trade options on ETFs without a license. This 
dismissal was affirmed by the United States Court of Appeals for the Second 
Circuit in June 2006. The Second Circuit ruled that markets, in facilitating the 
trading of options on ETFs, are not misappropriating any intellectual property 
right of index providers. Further, many other entrants have recently emerged who 
not only compete with us for future growth opportunities, but who may also 
introduce products that erode the position of our current offerings, thereby 
adversely affecting our business, financial condition and operating results.


A decrease in trading volume will decrease our trading revenues.

Trading volume is directly affected by economic and political conditions, broad
trends in business and finance, changes in price levels of securities and the
overall level of investor confidence. Weak economic conditions or a reduction in
securities prices could result in a decline in trading volume. A decline in
trading volume would lower revenues and may adversely affect our operating
results. We are particularly affected by declines in trading volume in
technology-related securities because a significant portion of our customers
trade in these types of securities and a large number of the companies listed on
The Nasdaq Stock Market are in the technology sector. In addition, investor
confidence and trader interest, and thus trading volume, can be affected by
factors outside our control, such as the publicity surrounding investigations
and prosecutions for corporate governance or accounting irregularities at public
companies.


Declines in the initial public offering market have an adverse effect on our
revenues.

Stagnation or decline in the initial public offering market will impact the
number of new listings on The Nasdaq Stock Market, and thus our related
revenues. We recognize revenue from new listings on a straight-line basis over
an estimated six-year service period. As a result of the decline in the IPO
market from 2000-2002, our deferred revenue associated with those years will be
lower than our deferred revenue associated with the periods from 2003 to the
present.


Losses in listings could cause a reduction in revenues.

While the reduction in initial listings or the loss of one or more large issuers
could decrease listing revenues, it could cause an even more significant
decrease in revenues from the quoting, reporting and trading of those issuers'
securities. If the combined NYSE/Euronext is successful in competing with us for
core listings, we would lose not only the listing fees associated with those
companies, but also a substantial amount of the trade execution fees generated
by trading in those companies' securities.


We may experience fluctuations in our operating results.

The financial services industry is risky and unpredictable and is directly
affected by many national and international factors beyond our control. Any one
of these factors could have a material adverse effect on our business, financial
condition and operating results by causing a substantial decline in the
financial services markets and reduced trading volume.

Our revenue, margins and operating results have varied in the past and are
likely to fluctuate significantly in the future, making them difficult to
predict. These difficulties are particularly exacerbated in light of our recent
acquisitions and the uncertainties surrounding the benefits and costs associated
with integration. Additionally, since our borrowings under our credit facilities
bear interest at variable rates and we do not have interest rate hedges in place
on this debt, any increase in interest rates will increase our interest expense
and reduce our cash flow. Other than variable rate debt, we believe our business
has relatively large fixed costs and low variable costs, which magnifies the
impact of revenue fluctuations on our operating results. As a result, a decline
in our revenue may lead to a relatively larger impact on operating results. A
substantial portion of our operating expenses will be related to personnel
costs, regulation and corporate overhead, none of which can be adjusted quickly
and some of which cannot be adjusted at all. Our operating expense levels are
based on our expectations for future revenue. If actual revenue is below
management's expectations, or if our expenses increase before revenues do, both
gross margins and operating results would be materially and adversely affected.
Because of these actions, it is possible that our operating results or other
operating metrics may fail to meet the expectations of stock market analysts and
investors. If this happens, the market price of our common stock is likely to
decline.


We must control our costs to remain profitable.

We base our cost structure on historical and expected levels of demand for our
products and services. A decline in our products and services may reduce our
revenues without a corresponding decline in our expenses since we may not be
able to adjust our cost structure on a timely basis. Our ability to manage our
costs will be particularly challenging as a result of recent acquisitions and
integration efforts. Failure to achieve our goals on cost savings will have an
adverse impact on our results of operations.


We may not be able keep up with rapid technological and other competitive
changes affecting our industry.

The markets in which we compete are characterized by rapidly changing
technology, evolving industry standards, frequent enhancements to existing
products and services, the introduction of new services and products and
changing customer demands. If our platforms fail to function as expected, our
business would be negatively affected. In addition, our business, financial
condition and operating results may be adversely affected if we cannot
successfully develop, introduce, or market new services and products or if we
need to adopt costly and customized technology for our services and products. In
addition, our failure to anticipate or respond adequately to changes in
technology and customer preferences, or any significant delays in product
development efforts, could have a material adverse effect on our business,
financial condition and operating results.


System limitations, failures or security breaches could harm our business.

Our business depends on the integrity and performance of the computer and
communications systems supporting us. If our systems cannot expand to cope with
increased demand or otherwise fail to perform, we could experience unanticipated
disruptions in service, slower response times and delays in the introduction of
new products and services. These consequences could result in lower trading
volumes, financial losses, decreased customer service and satisfaction and
regulatory sanctions. We have experienced occasional systems failures and delays
in the past and could experience future systems failures and delays.

If our trading volume increases unexpectedly, we will need to expand and upgrade
our technology, transaction processing systems and network infrastructure. We do
not know whether we will be able to accurately project the rate, timing, or cost
of any increases, or expand and upgrade our systems and infrastructure to
accommodate any increases in a timely manner.

Our systems and operations also are vulnerable to damage or interruption from
human error, natural disasters, power loss, sabotage or terrorism, computer
viruses, intentional acts of vandalism and similar events. We have active and
aggressive programs in place to identify and minimize our exposure to these
vulnerabilities and work in collaboration with the technology industry to share
corrective measures with our business partners. Although we currently maintain
multiple computer facilities that are designed to provide redundancy and back-up
to reduce the risk of system disruptions and have facilities in place that are
expected to maintain service during a system disruption, such systems and
facilities may prove inadequate. Any system failure that causes an interruption
in service or decreases the responsiveness of our services could impair our
reputation, damage our brand name and negatively impact our business, financial
condition and operating results.


The adoption and implementation of Regulation NMS by the SEC could adversely
affect our business.

On April 6, 2005, the SEC adopted Regulation NMS. Regulation NMS's four primary
components are: the Order Protection Rule, the Access Rule, the Market Data Rule
and the Sub-Penny Rule. The major provisions of Regulation NMS will continue to
be phased in over the course of 2007. We may incur technological and other costs
in changing our systems and operations so that we can comply with these rules.
We may also lose revenues due to a new formula under Regulation NMS for
allocating market data revenue under the National Market System plans.
Additionally, the impact of Regulation NMS is hard to predict and there may be
problems or competitive challenges that we do not foresee that adversely affect
our business as Regulation NMS is implemented. Finally, there is also a risk
that the rules may materially change during implementation which would undermine
business plans and investments that have been made based on the current form of
the rules.


Regulatory changes and changes in market structure could have a material adverse
effect on our business.

We operate in a highly regulated industry. In recent years, the securities
trading industry and, in particular, the securities markets, have been subject
to significant regulatory changes. Moreover, the securities markets have been
the subject of increasing governmental and public scrutiny in response to a
number of recent developments and inquiries. Any of these factors or events may 
result in future regulatory or other changes, although we cannot predict the 
nature of these changes or their impact on our business at this time. Our 
customers also operate in a highly regulated industry. The SEC and other 
regulatory authorities could impose regulatory changes that could impact the 
ability of our customers to use The Nasdaq Market Center or could adversely 
affect The Nasdaq Stock Market. The loss of a significant number of customers or 
a reduction in trading activity on The Nasdaq Stock Market as a result of such 
changes could have a material adverse effect on our business, financial 
condition and operating results.


We are subject to extensive regulation that may harm our ability to compete with
less regulated entities.

Under current U.S. federal securities laws, changes in our rules and operations,
including our pricing structure, must be reviewed, and in many cases explicitly
approved by the SEC. The SEC may approve, disapprove, or recommend changes to
proposals that we submit. In addition, the SEC may delay the initiation of the
public comment process or the approval process. This delay in approving changes,
or the altering of any proposed change, could have an adverse effect on our
business, financial condition and operating results. We must compete not only
with ECNs that are not subject to the same SEC approval process, but also with
other exchanges that have lower regulation and surveillance costs than us. There
is a risk that trading will shift to exchanges that charge lower fees because,
among other reasons, they spend significantly less on regulation.

In addition, Nasdaq Execution Services, LLC and NASDAQ Options Services, LLC are
broker-dealers, which are subject to regulation by the SEC, NASD and other
self-regulatory organizations. Any failure to comply with these broker-dealer
regulations could have a material effect on the operation of our business,
financial condition and operating results.

Our registered broker-dealers subsidiaries are subject to regulatory
requirements intended to ensure their general financial soundness and liquidity,
which require that they comply with certain minimum capital requirements. The
SEC and NASD impose rules that require notification when net capital falls below
certain predefined criteria, dictate the ratio of debt to equity in the
regulatory capital composition of a broker-dealer and constrain the ability of a
broker-dealer to expand its business under certain circumstances. Additionally,
the Uniform Net Capital Rule, NYSE and NASD rules impose certain requirements
that may have the effect of prohibiting a broker-dealer from distributing or
withdrawing capital and requiring prior notice to, and/or approval of, the SEC,
NYSE and NASD for certain withdrawals of capital.


We have self-regulatory organization obligations and also operate a for-profit
business, and these two roles may create conflicts of interest.

We have obligations to regulate and monitor activities on The Nasdaq Stock
Market and ensure compliance with applicable law and the rules of our market by
market participants and Nasdaq-listed companies. The SEC staff has expressed
concern about potential conflicts of interest of 'for-profit' markets performing
the regulatory functions of a self-regulatory organization. While we outsource
the majority of our market regulation functions to NASD, we do perform
regulatory functions related to our listed companies and our market. In
addition, as part of our application for exchange registration, we have agreed
that 20% of the directors of our exchange subsidiary will be elected by members
of the exchange rather than the equity holders of the subsidiary. Any failure by
us to diligently and fairly regulate our market or to otherwise fulfill our
regulatory obligations could significantly harm our reputation, prompt SEC
scrutiny and adversely affect our business and reputation.


Failure to attract and retain key personnel may adversely affect our ability to
conduct business.

Our future success depends, in large part, upon our ability to attract and
retain highly qualified professional personnel. Competition for key personnel in
the various localities and business segments in which we operate is intense. Our
ability to attract and retain key personnel, in particular senior officers, is
dependent on a number of factors, including prevailing market conditions and
compensation packages offered by companies competing for the same talent. In
particular, we are highly dependent on the continued services of Robert
Greifeld, our President and Chief Executive Officer, and other executive
officers and key employees who possess extensive financial markets knowledge and
technology skills. Other than employment agreements with Mr. Greifeld and our
general counsel, we do not have employment agreements with our key executive
officers, which would prevent them from leaving and competing with us. We do not
maintain 'key person' life insurance policies on any of our executive officers,
managers, key employees or technical personnel. The loss of the services of
these persons for any reason, as well as any negative market or industry
perception arising from those losses, could have a material adverse effect on
our business, financial condition and operating results.


We are subject to risks relating to litigation and potential securities laws
liability.

Many aspects of our business potentially involve substantial liability risks.
While we enjoy immunity from private suits for self-regulatory organization
activities, we and our broker-dealer affiliates could be exposed to liability
under federal and state securities laws, other federal and state laws and court
decisions, as well as rules and regulations promulgated by the SEC and other
regulatory agencies. These risks include, among others, potential liability from
disputes over the terms of a trade, or claims that a system failure or delay
cost a customer money, that we entered into an unauthorized transaction or that
we provided materially false or misleading statements in connection with a
securities transaction. As we intend to defend any such litigation actively,
significant legal expenses could be incurred. An adverse resolution of any
future lawsuit or claim against us or our affiliates could have an adverse
effect on our business, financial condition and operating results.

In addition, we are subject to oversight by the SEC. The SEC regularly examines
us and our broker-dealer affiliates for compliance with our obligations under
the securities laws. In the case of non-compliance with our obligations under
those laws, we or our broker-dealer affiliates could be subject to investigation
and judicial or administrative proceedings that may result in substantial
penalties.


Failure to protect our intellectual property rights could harm our
brand-building efforts and ability to compete effectively.

To protect our intellectual property rights, we rely on a combination of
trademark laws, copyright laws, patent laws, trade secret protection,
confidentiality agreements and other contractual arrangements with our
affiliates, clients, strategic partners and others. The protective steps that we
take may be inadequate to deter misappropriation of our proprietary information.
We may be unable to detect the unauthorized use of, or take appropriate steps to
enforce, our intellectual property rights. We have registered, or applied to
register, our trademarks in the United States and in over 50 foreign
jurisdictions and have pending U.S. and foreign applications for other
trademarks. Effective trademark, copyright, patent and trade secret protection
may not be available in every country in which we offer our services. Failure to
protect our intellectual property adequately could harm our brand and affect our
ability to compete effectively. Further, defending our intellectual property
rights could result in the expenditure of significant financial and managerial
resources, which could adversely affect our business, financial condition and
operating results.


We are a holding company that depends on cash flow from our subsidiaries to meet
our obligations.

We are a holding company with no material assets other than the equity interests
of our subsidiaries. Accordingly, all our operations are conducted by our
subsidiaries. As a holding company, we require dividends and other payments from
our subsidiaries to meet cash requirements or to pay dividends. If our
subsidiaries are unable to pay us dividends and make other payments to us when
needed, we will be unable to satisfy our obligations.


The SEC's approval of our application to operate a national securities exchange
contains conditions that must be satisfied before we implement the order.

On January 13, 2006, the SEC approved our application to register a newly formed
limited liability company, The NASDAQ Stock Market LLC, as a national securities
exchange. We began operating as an exchange in Nasdaq-listed securities on
August 1, 2006. In order to operate as an exchange in non-Nasdaq listed
securities, which we expect to occur in the first quarter of 2007, NASD must
establish a separate facility for disseminating over-the-counter quotations and
collecting over-the-counter trade reports for non-Nasdaq-listed securities.
Although the SEC has allowed us to operate as an exchange for Nasdaq-listed
stocks prior to the satisfaction of this condition, we will not be able to
operate as an exchange for non-Nasdaq-listed securities until this condition is
satisfied. Until the condition is satisfied, we will continue to rely on NASD's
SRO license to operate facilities that have not yet transitioned to the
exchange.


Risks Relating to an Investment in Our Common Stock

Volatility in our stock price could adversely affect our stockholders.

The market price of our common stock is likely to be volatile. Broad market and
industry factors may adversely affect the market price of our common stock,
regardless of our actual operating performance. Factors that could cause
fluctuations in our stock price may include, among other things:

    • developments with respect to our investment in, and proposed acquisition 
      of, LSE;
    • actual or anticipated variations in our quarterly operating results;
    • changes in financial estimates by us or by any securities analysts who 
      might cover our common stock;
    • conditions or trends in our industry, including trading volumes, 
      regulatory changes or changes in the securities marketplace;
    • announcements by us or our competitors of significant acquisitions, 
      strategic partnerships or divestitures;
    • announcements of investigations or regulatory scrutiny of our operations 
      or lawsuits filed against us;
    • additions or departures of key personnel; and
    • sales of our common stock, including sales of our common stock by our
      directors and officers, significant stockholders or our strategic 
      investors.


The market price of our common stock could be negatively affected by sales of
substantial amounts of our common stock in the public markets.

Sales of a substantial number of shares of our common stock in the public
markets, or the perception that these sales might occur, could cause the market
price of our common stock to decline or could impair our ability to raise
capital through a future sale of, or pay for acquisitions using our equity
securities. As of November 30, 2006, there were 112,207,834 shares of our common
stock outstanding. All of our common stock is freely transferable, except shares
held by our 'affiliates,' as defined in Rule 144 under the Securities Act.

The number of freely transferable shares of our common stock will increase upon
any exercise of outstanding options pursuant to our stock compensation and stock
award plan for our employees. There were 4,448,989 options exercisable as of
November 30, 2006 at a weighted average exercise price of $8.71. The number of
our shares of our common stock outstanding will also increase upon any
conversion of our convertible notes primarily held by Silver Lake Partners, or
SLP, and Hellman & Friedman or their respective affiliates, which are currently
convertible at a conversion price of $14.50 per share into approximately
30.7 million shares of our common stock, or any exercise of warrants held by SLP
and Hellman & Friedman or their respective affiliates, which are exercisable at
a price of $14.50 per share into approximately 5.0 million shares of our common
stock. We have granted SLP and Hellman & Friedman and their affiliates demand
and piggyback registration rights with respect to the convertible notes and the
shares of our common stock underlying those notes and warrants. All shares or
notes sold under a registration statement will be freely transferable.


NASD will continue to maintain voting control over us as long as we operate
pursuant to authority delegated to us under the NASD Delegation Plan with
respect to securities not listed on Nasdaq, and NASD may have interests that are
different from yours and, therefore, may make decisions that are adverse to your
interests.

The SEC requires that NASD retain greater than 50% of the voting control over us
until certain conditions have been met. The one outstanding Series D Preferred
share issued to NASD ensures that NASD maintains voting control for as long as
we operate pursuant to authority delegated to us under the Delegation Plan
(which is an SEC-approved rule of the NASD, pursuant to which the NASD delegates
certain authority to us and other entities) with respect to trading securities
not listed on Nasdaq. The voting power of the Series D Preferred share is
recalculated for each matter presented to stockholders. NASD is entitled to cast
the number of votes that, together with all other votes that NASD is entitled to
vote by virtue of ownership, proxies or voting trusts, enables NASD to cast one
vote more than one-half of all votes entitled to be cast by holders of our
securities. Once we cease to operate pursuant to authority delegated to us by
the NASD under the Delegation Plan with respect to trading securities not listed
on Nasdaq, the Series D Preferred share will automatically lose its voting
rights and will be redeemed by us for $1.00. We expect the redemption of the
Series D Preferred share to occur prior to our offers to acquire all of the
outstanding equity interests of LSE becoming unconditional. Until such time,
NASD will continue to have the ability, if it so elects, to dictate the outcome
of matters brought to a vote of our stockholders. NASD may have interests that
conflict with the interests of holders of our common stock. NASD's voting
control may delay or prevent a change in control, impede a merger,
consolidation, takeover, or other business combination involving us or
discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us or result in actions that may be opposed by
other stockholders.


Provisions of our certificate of incorporation and approved exchange rules,
including provisions included to address SEC concerns, and Delaware law could
delay or prevent a change in control of us and entrench current management.

Our organizational documents place restrictions on the voting rights of certain
stockholders. Our certificate of incorporation limits the voting rights of
persons (either alone or with related parties) owning more than 5% of the then
outstanding votes entitled to be cast on any matter, other than NASD or any
other person as may be approved by our board of directors prior to the time such
person owns more than 5% of the then outstanding votes entitled to be cast on
any matter. The SEC has proposed rules that will impose voting and ownership
limitations on broker-dealers of 20%, but not require other voting or ownership 
limitations. We have not determined at this time if we will seek to raise our 5% 
voting limitation if the SEC adopts the proposed rule. Any change to the 5% 
voting limitation would require SEC approval.

In response to the SEC's concern about a concentration of our ownership, our
exchange rules include a rule prohibiting any Nasdaq member or any person
associated with a Nasdaq member beneficially owning more than 20% of our
outstanding voting interests. SEC consent would be required before any investor
could obtain more than a 20% voting interest in us. Our exchange rules also
require the SEC's approval of any business ventures with one of our members,
subject to exceptions.

In addition, our organizational documents contain provisions that may be deemed
to have an anti-takeover effect and may delay, deter or prevent a change of
control of us, such as a tender offer or takeover proposal that might result in
a premium over the market price for our common stock. Additionally, certain of
these provisions make it more difficult to bring about a change in the
composition of our board of directors, which could result in entrenchment of
current management.

In addition, our certificate of incorporation and by-laws:
    • require supermajority stockholder approval to remove directors;
    • do not permit stockholders to act by written consent or to call special
      meetings;
    • require certain advance notice for director nominations and actions to be
      taken at annual meetings;
    • require supermajority stockholder approval with respect to certain 
      amendments to our certificate of incorporation and by-laws (including in 
      respect of the provisions set forth above); and
    • authorize the issuance of undesignated preferred stock, or 'blank check'
      preferred stock, that could be issued by our board of directors without
      stockholder approval.

Section 203 of the Delaware General Corporation Law imposes restrictions on
mergers and other business combinations between us and any holder of 15% or more
(or, in some cases, a holder who previously held 15% or more) of our common
stock. In general, Delaware law prohibits a publicly held corporation from
engaging in a 'business combination' with an 'interested stockholder' for three
years after the stockholder becomes an interested stockholder, unless the
corporation's board of directors and stockholders approve the business
combination in a prescribed manner.


Risks Relating to Our Proposed Acquisition of LSE.

On November 20, 2006, we announced the terms of offers to acquire all of the
outstanding equity interests of LSE (other than shares currently owned by us)
and we requested a meeting with LSE's chairman. Later that same day, LSE
announced that its board was rejecting our offers and rejecting our request for
a meeting. Especially, in the light of LSE board's rejection of our proposal,
our successful acquisition of LSE is not assured. If successful, rationalizing
and coordinating the operations of LSE and us will involve complex
technological, operational and personnel-related challenges. This process will
be time-consuming and expensive and may disrupt the business of the companies.
Moreover, the time involved, the expense required and the disruption entailed
may exceed our expectations.


LSE is subject to certain risks.

LSE suffers many of the same risks we suffer. Upon successful completion of our
proposed acquisition of LSE, we will be subject to the risks suffered by LSE.


Charges to earnings resulting from acquisition, restructuring and integration
costs may materially adversely affect the market value of our common stock
following the proposed LSE acquisition.

In accordance with U.S. GAAP, the combined company will account for the proposed
LSE acquisition using the purchase method of accounting. The combined company
will allocate the total estimated purchase price to LSE's net tangible assets,
amortizable intangible assets and non-amortized intangibles based on their fair
values as of the date of completion of the acquisition, and record the excess of
the purchase price over those fair values as goodwill. The combined company's 
financial results, including earnings per share, could be adversely affected by
a number of financial adjustments required by U.S. GAAP including the following:

    • The combined company will incur additional amortization expense over the
      estimated useful lives of certain of the intangible assets acquired in
      connection with the acquisition during such estimated useful lives.
    • The combined company may have additional depreciation expense as a result 
      of recording purchased assets at fair value in accordance with U.S. GAAP, 
      as compared to book value recorded by LSE.
    • To the extent the value of goodwill or intangible assets with indefinite .
      lives becomes impaired, the combined company may be required to incur 
      material charges relating to the impairment of those assets.
    • The combined company will incur certain adjustments to reflect LSE's 
      financial condition and operating results under U.S. GAAP and U.S. 
      dollars.

We expect to incur costs associated with the acquisition, including advisors'
fees and legal and accounting fees. In addition, we expect to incur costs
associated with realizing synergies from the acquisition. These costs may be
substantial and may include those related to the severance and stock option
acceleration provisions of LSE's employee benefit plans, which could be
triggered by the proposed acquisition as well as other exit costs. We face
potential costs related to employee retention and deployment of physical capital
and other integration costs. We have not yet determined the amount of these
costs. We expect to account for costs directly related to the acquisition,
including advisors' costs, legal and accounting fees, and certain exit costs
associated with LSE's operations, as purchase related adjustments when the
acquisition is completed, as prescribed under U.S. GAAP. These items will reduce
cash balances for the periods in which those costs are paid. Other costs that
are not directly related to the acquisition, including retention and integration
costs will be recorded as incurred and will negatively impact earnings, which
could have a material adverse effect on the price of our common stock. LSE
reports its financial results in accordance with International Financial
Reporting Standards. To the extent LSE had reported its results under U.S. GAAP,
it may have reported its financial results differently. We are not able to
determine what the impact would have been had LSE reported its results under
U.S. GAAP.


The market price of our common stock may decline as a result of the proposed LSE
acquisition.

The market price of our common stock may decline as a result of our consummation
of the offers if:
    • the combination of LSE's and our businesses is unsuccessful;
    • we do not achieve the expected benefits of the acquisition of LSE as 
      rapidly or to the extent anticipated by financial analysts or investors; 
      or
    • the effect of the proposed acquisition on our financial results is not
      consistent with the expectations of financial analysts or investors.


The benefits of the combination of LSE and us may not be achieved if we cannot
effect the compulsory acquisition of all of the issued and outstanding LSE
shares.

To effect the compulsory acquisition of LSE shares for which valid acceptances
have not been received under the offers under English law, we are required to
have acquired at least 90% of the shares to which the offer relates. It is
possible that, at the end of the offer period, we will not have acquired a
sufficient number of LSE shares under the offers to effect a compulsory
acquisition of the remaining outstanding LSE shares. This could prevent or delay
us from realizing some or all of the anticipated benefits from the integration
of our operations with LSE's operations.


Our lack of due diligence access to LSE may result in the inability to foresee
certain risks associated with LSE's business.

We have not had any due diligence access to LSE and its material non-public
financial or other information in the context of the offers. While LSE is
subject to periodic reporting obligations in the United Kingdom, there can be no
assurance that information publicly disclosed by LSE includes all information
necessary to make an informed assessment of LSE's results of operations,
financial condition and prospects. There is a risk that we will fail to discover
certain liabilities of LSE or operating or other problems of LSE.


The consideration to be paid in the offers to LSE shareholders who accept the
offer and receive cash is based on a fixed amount of pounds sterling and,
therefore, we are subject to currency fluctuations through to the payment date.

Because we will pay all holders of LSE shares in a fixed amount of pounds
sterling, we must buy pounds sterling with U.S. dollars at the prevailing
exchange rate on the payment date. As a result, the actual amount of U.S.
dollars required to buy a sufficient amount of pounds sterling to pay the offer
price will depend upon the exchange rate prevailing on the business day on which
the funds are made available by us. In connection with the offers for LSE
shares, we have entered into arrangements to provide us the option (but not the
obligation) to acquire pounds sterling at a specified price. To the extent we
have not hedged our exposure to exchange rate fluctuation, we are subject to the
risk of fluctuations in the dollar/pound sterling exchange rate.


The regulatory framework under which LSE operates and new regulatory
requirements or new interpretations of existing regulatory requirements could
require substantial time and resources for compliance, which could make it
difficult and costly for the combined company to operate the businesses.

LSE's subsidiary, London Stock Exchange plc, or the London Stock Exchange, as a
recognized investment exchange, or RIE, is subject to extensive regulation by
the UK Financial Services Authority, or the FSA. In order to obtain RIE status,
a body must satisfy the recognition requirements which include the provision of
proper and orderly markets, sufficiency of financial resources, safeguards for
investors, monitoring and enforcement, and investigation of complaints. If an
RIE fails to continue to meet such recognition requirements, or if the RIE fails
to comply with any obligation to which it is subject under the Financial
Services and Markets Act, then the FSA has the power to direct compliance by the
RIE with such requirements and ultimately to revoke the RIE's recognition. In
addition, the London Stock Exchange must satisfy the FSA that it is properly
discharging its regulatory responsibilities relating to AIM (Alternative
Investment Market). The London Stock Exchange has a dedicated AIM regulation
team and regularly reviews the appropriateness of its procedures in this area,
both internally and with the FSA. If the FSA were to put sanctions in place or
revoke the London Stock Exchange's RIE status, it would have a material adverse
effect on the combined company's business, financial condition and operating
results.

In addition, certain of the London Stock Exchange's customers also operate in a
highly regulated industry. The FSA and other regulatory authorities could impose
regulatory changes that could impact the ability of the London Stock Exchange's
customers to use the London Stock Exchange or could adversely affect the London
Stock Exchange. The loss of a significant number of customers or a reduction in
trading activity on London Stock Exchange as a result of such changes could have
a material adverse effect on the combined company's business, financial
condition and operating results.

Furthermore, if there are changes in laws or regulations (or changes in the
application of current laws or regulations) so that such laws or regulations are
applied to market participants and/or listed companies on an extraterritorial
basis, such as the Sarbanes-Oxley Act, such changes could have a material
adverse effect on the combined company's business, financial condition and
operating results.


New MiFID legislation may enhance competition for trading reporting revenues in
Europe.

The terms under which business has been conducted in the UK have been the
subject of EU directives that have presented opportunities to conduct and
publish trades in different ways and on alternative venues. The new MiFID
legislation is expected to come into effect on November 1, 2007. This
legislation requires all business in securities traded on regulated markets to
be published via a reporting venue irrespective of where the trade takes place.
This provides the London Stock Exchange with the opportunity to compete for
pan-European trade reporting as well as generating a competitive threat for
existing trade reporting revenues earned by the London Stock Exchange. The
London Stock Exchange will face competition from other exchanges as well as from
ECNs and alternative trading systems (including a move towards greater
systematic internalization by member firms). This competition may intensify in
the near future especially as technological advances create pressure to reduce
the costs of trading.


LSE's clearing services arrangements could make it difficult to make alternative
arrangements in an efficient manner.

Clearing services for securities on the London Stock Exchange's markets are
provided by LCH.Clearnet Ltd, a subsidiary of LCH.Clearnet Group Ltd, which is
partly owned by a competitor of the London Stock Exchange. We understand that
the London Stock Exchange has in place detailed contractual provisions designed
to ensure the fair treatment of the London Stock Exchange and its customers by
LCH.Clearnet. We understand that LCH.Clearnet is currently proposing to migrate
all the cash equity markets for which it provides clearing services onto a
single clearing system. If implemented, we believe that such a migration will
make it more difficult for the London Stock Exchange to transition clearing
services to other providers in the event that the London Stock Exchange believes
such a transition is in its and its customers' best interests.


           CERTAIN U.S. FEDERAL TAX CONSEQUENCES TO NON-U.S. HOLDERS

The following is a general discussion of certain U.S. federal income and estate
tax consequences of the purchase, ownership and disposition of our common stock.
This discussion applies only to a non-U.S. holder (as defined below) of our
common stock. This discussion is based upon the provisions of the Internal
Revenue Code of 1986, as amended, or the Code, the Treasury regulations
promulgated thereunder and administrative and judicial interpretations thereof,
all as of the date hereof, all of which are subject to change, possibly with
retroactive effect. This discussion is limited to investors that hold our common
stock as capital assets for U.S. federal income tax purposes. Furthermore, this
discussion does not address all aspects of U.S. federal income and estate
taxation that may be applicable to investors in light of their particular
circumstances, or to investors subject to special treatment under U.S. federal
income or estate tax law, such as financial institutions, insurance companies,
tax-exempt organizations, entities that are treated as partnerships for U.S.
federal tax purposes, dealers in securities or currencies, expatriates, persons
deemed to sell our common stock under the constructive sale provisions of the
Code and persons that hold our common stock as part of a straddle, hedge,
conversion transaction or other integrated investment. Furthermore, this
discussion does not address any U.S. federal gift tax consequences or any state,
local or foreign tax consequences. Prospective investors should consult their
tax advisors regarding the U.S. federal, state, local and foreign income, estate
and other tax consequences of the purchase, ownership and disposition of our
common stock.

For purposes of this summary, the term 'non-U.S. holder' means a beneficial
owner of our common stock that is not, for U.S. federal income and estate tax
purposes, (i) a citizen or resident of the United States, (ii) a corporation or
other entity subject to tax as a corporation for such purposes that is created
or organized under the laws of the United States or any political subdivision
thereof, (iii) a partnership (including any entity or arrangement treated as a
partnership for such purposes), (iv) an estate the income of which is subject to
U.S. federal income taxation regardless of its source, or (v) a trust (A) if a
court within the United States is able to exercise primary supervision over its
administration and one or more U.S. persons have the authority to control all of
its substantial decisions or (B) that has made a valid election to be treated as
a U.S. person for such purposes. If a partnership (including any entity or
arrangement treated as a partnership for such purposes) owns our common stock,
the tax treatment of a partner in the partnership will depend upon the status of
the partner and the activities of the partnership. Partners in a partnership
that owns our common stock should consult their tax advisors as to the
particular U.S. federal income and estate tax consequences applicable to them.


Dividends

Dividends paid to a non-U.S. holder generally will be subject to withholding of
U.S. federal income tax at a 30% rate or such lower rate as may be specified by
an applicable income tax treaty. Non-U.S. holders should consult their tax
advisors regarding their entitlement to benefits under an applicable income tax
treaty and the manner of claiming the benefits of such treaty. A non-U.S. holder
that is eligible for a reduced rate of withholding tax under an income tax
treaty may obtain a refund or credit of any excess amounts withheld by filing an
appropriate claim for refund with the Internal Revenue Service.

Dividends that are effectively connected with a non-U.S. holder's conduct of a
trade or business in the United States and, if certain income tax treaties
apply, that are attributable to a non-U.S. holder's permanent establishment in
the United States are not subject to the withholding tax described above but
instead are subject to U.S. federal income tax on a net income basis at
applicable graduated U.S. federal income tax rates. A non-U.S. holder must
satisfy certain certification requirements for its effectively connected
dividends to be exempt from the withholding tax described above. Dividends
received by a foreign corporation that are effectively connected with its
conduct of a trade or business in the United States may be subject to an
additional branch profits tax at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.


Gain on Disposition of Common Stock

A non-U.S. holder generally will not be taxed on gain recognized on a
disposition of our common stock unless:

    • the non-U.S. holder is an individual who holds our common stock as a 
      capital asset, is present in the United States for 183 days or more during 
      the taxable year of the disposition and meets certain other conditions;
    • the gain is effectively connected with the non-U.S. holder's conduct of a
      trade or business in the United States and, if certain income tax treaties
      apply, is attributable to a Non-U.S. Holder's permanent establishment in 
      the United States; or
    • we are or have been a 'United States real property holding corporation' 
      for U.S. federal income tax purposes at any time within the shorter of the 
      five-year period ending on the date of disposition or the period that the 
      non-U.S. holder held our common stock. We do not believe that we have been, 
      currently are, or will become, a United States real property holding 
      corporation. If we were or were to become a United States real property 
      holding corporation at any time during the applicable period, however, any 
      gain recognized on a disposition of our common stock by a non-U.S. Holder 
      that did not own (directly, indirectly or constructively) more than 5% of 
      our common stock during the applicable period would not be subject to U.S. 
      federal income tax, provided that our common stock is 'regularly traded on 
      an established securities market' (within the meaning of Section 897(c)(3) 
      of the Code).

Individual non-U.S. holders who are subject to U.S. federal income tax because
the holders were present in the United States for 183 days or more during the
year of disposition are taxed on their gains (including gains from the sale of
our common stock and net of applicable U.S. losses from sales or exchanges of
other capital assets recognized during the year) at a flat rate of 30% or such
lower rate as may be specified by an applicable income tax treaty. Other
non-U.S. holders subject to U.S. federal income tax with respect to gain
recognized on the disposition of our common stock generally will be taxed on any
such gain on a net income basis at applicable graduated U.S. federal income tax
rates and, in the case of foreign corporations, the branch profits tax discussed
above also may apply.


Federal Estate Tax

Our common stock that is owned or treated as owned by an individual who is a
non-U.S. holder at the time of death will be included in the individual's gross
estate for U.S. federal estate tax purposes, and, therefore, U.S. federal estate
tax may be imposed with respect to the value of such stock, unless an applicable
estate tax or other treaty provides otherwise.


Information Reporting and Backup Withholding

In general, backup withholding will apply to dividends on our common stock paid
to a non-U.S. holder, unless the holder has provided the required certification
that it is a non-U.S. holder and the payor does not have actual knowledge (or
reason to know) that the holder is a U.S. person. Generally, information will be
reported to the Internal Revenue Service regarding the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax withheld.
These information reporting requirements apply even if no tax was required to be
withheld. A similar report is sent to the recipient of the dividend.

In general, backup withholding and information reporting will apply to the
payment of proceeds from the disposition of our common stock by a non-U.S.
holder through a U.S. office of a broker or through the non-U.S. office of a
broker that is a U.S. person or has certain enumerated connections with the
United States, unless the holder has provided the required certification that it
is a non-U.S. holder and the payor does not have actual knowledge (or reason to
know) that the holder is a U.S. person.

Backup withholding is not an additional tax. Any amounts that are withheld under
the backup withholding rules from a payment to a non-U.S. holder will be
refunded or credited against the holder's U.S. federal income tax liability, if
any, provided that certain required information is furnished to the Internal
Revenue Service.

Non-U.S. holders should consult their tax advisors regarding the application of
the information reporting and backup withholding rules to them.


                               INFORMATION OF LSE

We have included in our SEC reports information concerning LSE known to us based
on publicly available information. We are not affiliated with LSE, and LSE has
not permitted us to have access to its books and records. Therefore, non-public
information concerning LSE was not available to us for the purpose of preparing
those reports. Although we have no knowledge that would indicate that statements
relating to LSE contained in those reports are inaccurate or incomplete, we were
not involved in the preparation of those statements and cannot verify them.


               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The SEC encourages companies to disclose forward-looking information so that
investors can better understand a company's future prospects and make informed
investment decisions. This disclosure contains these types of statements. Words
such as 'anticipates,' 'estimates,' 'expects,' 'projects,' 'intends,' 'plans,'
'believes' and words or terms of similar substance used in connection with any
discussion of future operating results or financial performance identify
forward-looking statements.

These forward-looking statements involve certain risks and uncertainties.
Factors that could cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the
following factors:

    • our operating results may be lower than expected;
    • loss of significant trading volume or listed companies;
    • our proposed acquisition of London Stock Exchange Group plc;
    • our ability to implement our strategic initiatives and any consequences
      from our pursuit of our corporate strategy, including our integration of 
      INET and our acquisition of an approximate 28.8% stake in the London Stock 
      Exchange Group plc;
    • competition, economic, political and market conditions and fluctuations,
      including interest rate risk;
    • government and industry regulation; or
    • adverse changes that may occur in the securities markets generally.

Most of these factors are difficult to predict accurately and are generally
beyond our control. You should consider the uncertainty and any risk resulting
from such uncertainty 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 the date of this prospectus
supplement. Except for our ongoing obligations to disclose material information
under the federal securities laws, we undertake 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, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995.






                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                                                                           

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