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Thursday 18 January, 2007

NASDAQ Stock Market

Response to LSE's document

NASDAQ Stock Market, Inc. (The)
18 January 2007


                             FOR IMMEDIATE RELEASE


  THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
                              AUSTRALIA OR CANADA


                               FINAL CASH OFFERS*

                                       BY

                        NIGHTINGALE ACQUISITION LIMITED

          (A WHOLLY OWNED SUBSIDIARY OF THE NASDAQ STOCK MARKET, INC.)

            FOR THE ENTIRE ISSUED AND TO BE ISSUED SHARE CAPITAL OF

                        LONDON STOCK EXCHANGE GROUP PLC


                RESPONSE TO LSE'S DOCUMENT AND OFT ANNOUNCEMENT


The Board of The Nasdaq Stock Market, Inc. ('NASDAQ') notes the publication of a
new document (the 'Circular') by London Stock Exchange Group plc ('LSE') earlier
today.

NASDAQ would draw LSE Shareholders' attention to the fact that LSE:

• fails to provide a long-term strategic vision;

• announces a marginal return of capital;

• shows renewed complacency with respect to Project Turquoise;

• on our analysis, fails to take adequate account of the impact of
competition on future SETS volumes;

• fails to provide any new visibility on its cost base and deploys weak
arguments on standalone value.

Accordingly, LSE fails to present any information which changes NASDAQ's belief
that without NASDAQ your LSE Shares would be worth far less.

Lack of strategy

LSE again fails to provide a long-term strategic vision for the business and
focuses purely on short term reactive initiatives. Despite considerable press
speculation about a potential strategic alternative to a combination with NASDAQ
we note that LSE remains unable (or unwilling) to identify, let alone
consummate, an alternative transaction which would increase liquidity, provide
synergies and diversify the business.

Marginal return of capital

The LSE share buyback proves that LSE would rather weaken its strategic position
through reactive tactics than set out a clear vision for the business. The
amount proposed is less than half that given to shareholders in the defence to
the Macquarie bid, which valued ordinary shares at c. 36 per cent. of NASDAQ's
Ordinary Offer. We would also draw LSE Shareholders' attention to the fact that
LSE only returns capital when it needs their support: including the amount
announced today c. 76 per cent. of LSE's distributions over the last three years
is in direct response to unsolicited bids.

Renewed evidence of complacency

LSE characterizes Project Turquoise, an alternative equity market platform
backed by seven investment banks, as 'the ninth new UK equity trading platform
in the last seven years'. We regard this as clear evidence of LSE's failure to
recognize the significance of the initiative - have any of the previous rivals
been established and owned by parties responsible for c. 50 per cent. of the
trading volume on LSE?


Impact of competition on SETS volumes

NASDAQ believes that LSE fails to take adequate account of the impact of
competition on future SETS volumes. We anticipate that LSE would argue that its
projections are robust based on the outperformance of historic targets. LSE's
projections can only be proven through the passage of time, but one fact is
irrefutable - in its announcements this week LSE has introduced trading fee
reductions which are certain to have a negative impact on its revenue and
profitability whilst promising volume increases whose counterbalancing impact is
uncertain. In combination, these factors dramatically increase the risk profile
for LSE Shareholders.

The negative impact of pricing cuts on the LSE value case further strengthens
NASDAQ's belief that 1,243 pence per Ordinary Share is a full and fair price and
highlights the downside risk to the LSE share price were NASDAQ's offers to
lapse and the share to revert to a valuation based on fundamental drivers.

No new information and weak arguments on standalone value

LSE fails to provide any new visibility on its cost base or indeed any of its
other business drivers. Instead LSE again argues that it should be compared to a
global exchange sector including a diverse set of peers. This methodology is
sustained by reference to the fairness opinions provided in transactions where
the target - the Sydney Futures Exchange, Euronext, the New York Board of Trade
and the Chicago Board of Trade - is either a pure or hybrid derivatives
exchange, businesses which are subject to completely different growth drivers to
LSE, a pure cash equities business. The fact that European exchanges represent
the appropriate peer group is acknowledged by the vast majority of analysts,
including the analyst at LSE's lead financial adviser Merrill Lynch.

NASDAQ continues to believe that 1,243 pence per Ordinary Share represents a
full and fair price for your LSE shares.

OFT announcement

NASDAQ is pleased to note the announcement made by the Office of Fair Trading
('OFT') earlier today that the OFT has decided not to refer NASDAQ's offer for
LSE to the Competition Commission. The decision is consistent with NASDAQ's view
that a combination will yield benefits to LSE stakeholders.

Commenting on the Circular, NASDAQ President and CEO Robert Greifeld said:

'The only significant new information from LSE this week is its plan to cut
trading revenues through price reductions. This belated nod at its customers is
likely to be the first of many such reductions. These tariff cuts will be wrung
out of LSE through customer pressure and competitive action and will have a
profound impact on LSE profitability and on the value of an LSE share.'

Important information on NASDAQ's Final Offers

NASDAQ wishes to clarify its position under the City Code ('Code'). Under Rule
32.1 of the Code, NASDAQ is unable to revise its offers after Day 46 of its
offer period, in this case Saturday 27 January 2007, unless (i) the Board of LSE
recommends the Final Offers; or (ii) if a firm intention to make a competing
offer for LSE is announced (whether or not subject to any preconditions), and in
each case the Panel grants an extension to the offer timetable which resets Day
46 and Day 60. NASDAQ announces that after midnight on Day 46, in this case
Saturday 27 January 2007, NASDAQ's Final Offers will not be revised upon the
recommendation of the LSE Board.


LSE Shareholders are urged to accept the Final Offers as you, rather than the
LSE Board, will determine whether the Final Offers will be implemented.

LSE Shareholders who have not yet accepted the Final Offers and who hold LSE
Shares in certificated form (that is, not through CREST) should complete, sign
and return the relevant Form(s) of Acceptance in accordance with the
instructions thereon and the instructions in the Offer Document as soon as
possible and, in any event, so as to be received no later than 3.00 p.m. (London
time) on 26 January 2007.

LSE Shareholders who have not yet accepted the Final Offers and who hold LSE
Shares in uncertificated form (that is, through CREST), should submit a TTE
instruction in accordance with the instructions in the Offer Document for
settlement as soon as possible and, in any event, by no later than 3.00 p.m.
(London time) on 26 January 2007.

Copies of the Offer Document, the Response Document and Forms of Acceptance are
available for collection (during normal business hours only) from Capita
Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United
Kingdom and Greenhill & Co. International LLP at Lansdowne House, 57 Berkeley
Square, London W1J 6ER, United Kingdom. The Offer Document and the Response
Document are also available on www.nasdaq.com.

Save as defined above, capitalised terms used in this announcement have the same
meaning as in the Offer Document dated 12 December 2006 and NASDAQ's
announcement dated 8 January 2007.

*The Final Offers will not be revised except that NAL reserves the right to
revise the Final Offers: (i) upon the recommendation of the LSE Board; or (ii)
if a firm intention to make a competing offer for LSE is announced, whether or
not subject to any preconditions. NASDAQ announces that after midnight on Day
46, in this case Saturday 27 January 2007, NASDAQ's Final Offers will not be
revised upon the recommendation of the LSE Board.

Any references to Offers, offers, Offer, offer, Final Cash Offers or Final
Offers in this announcement refer to the Final Offers as defined in the Offer
Document dated 12 December 2006.

Sources and Bases

The reference to Macquarie's offer valuing the LSE ordinary shares at 36 per
cent. of NASDAQ's Final Offers is based on the Macquarie offer price of 580
pence as adjusted for the capital return.

Capital distributions as a direct response to unsolicited bids as per cent. of
total capital returned in the last two and a half years has been calculated as
sum of the share buyback announced by LSE today, the return of capital in
response to the Macquarie bid and the total share buyback announced in response
to the Macquarie bid as a proportion of total capital returned (including
interim and final dividends).

The reference to the Merrill Lynch analyst acknowledging that European exchanges
represent the appropriate peer group for LSE is based on the Merrill Lynch
research reports from 31 October 2006 and 22 September 2006.

The reference to Project Turquoise's equity trading market share is sourced from
the Wall Street Journal, 15 November 2006.


ENQUIRIES

The Nasdaq Stock Market, Inc.                     Tel: +1 (212) 401 8714
Bethany Sherman                                   +1 (917) 836 1724

Greenhill & Co. International LLP                 Tel: +44 (0)20 7198 7400
(lead financial adviser to NASDAQ and NAL)
Simon Borrows
Richard Hoyle

Dresdner Kleinwort Securities Limited             Tel: +44 (0)20 7623 8000
(broker to NASDAQ and NAL)
Angus Kerr
Alex Reynolds

Gavin Anderson & Company                          Tel: +44 (0)20 7554 1403 /
(PR adviser to NASDAQ and NAL)                                            1405
Richard Constant



Greenhill & Co. International LLP, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting exclusively for
NASDAQ and NAL and for no-one else in connection with the Final Offers and will
not be responsible to anyone other than NASDAQ and NAL for providing the
protections afforded to clients of Greenhill & Co. International LLP or for
giving advice in relation to the Final Offers.

Dresdner Kleinwort Securities Limited, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting exclusively for
NASDAQ and NAL and for no-one else in connection with the Final Offers and will
not be responsible to anyone other than NASDAQ and NAL for providing the
protections afforded to clients of Dresdner Kleinwort Securities Limited or for
giving advice in relation to the Final Offers.

This announcement does not constitute an offer to sell or an invitation to
purchase any securities or the solicitation of an offer to buy any securities,
pursuant to the Final Offers or otherwise. The Final Offers are being made
solely by the Offer Document and, in respect of shares held in certificated form
(that is, not through CREST), the Forms of Acceptance accompanying the Offer
Document, which contain the full terms and conditions of the Final Offers,
including details of how the Final Offers may be accepted.

Unless otherwise determined by NAL, the Final Offers are not being, and will not
be, made, directly or indirectly, in or into or by the use of the mails of, or
by any means or instrumentality (including, without limitation, facsimile
transmission, telex, telephone or e-mail) of interstate or foreign commerce of,
or by any facilities of a national securities exchange of, Australia or Canada
or any jurisdiction where to do so would violate the laws of that jurisdiction
and will not be capable of acceptance by any such use, means, instrumentality or
facility or from within Australia or Canada or any such jurisdiction.
Accordingly copies of this announcement are not being, and must not be, directly
or indirectly, mailed or otherwise forwarded, distributed or sent in, into or
from Australia or Canada or any such jurisdiction, where to do so would violate
the laws of that jurisdiction and persons receiving this announcement
(including, without limitation, custodians, nominees and trustees) must not mail
or otherwise distribute or send it in, into or from such jurisdiction as doing
so may invalidate any purported acceptance of the Final Offers. Any person
(including, without limitation, any custodian, nominee or trustee) who would, or
otherwise intends to, or who may have a contractual or legal obligation to
forward this announcement and/or the Offer Document and/or any related document
to any jurisdiction outside the United Kingdom and the United States should
inform himself of, and observe, any applicable legal or regulatory requirements
of that jurisdiction.

In accordance with the City Code, normal United Kingdom market practice, and
subject to applicable regulatory requirements and pursuant to exemptive relief
granted by the US Securities and Exchange Commission from Rule14e-5 under the US
Securities Exchange Act of 1934, (i) Dresdner Kleinwort Securities Limited and/
or its affiliates will continue to act as connected exempt principal traders in
LSE Shares on the London Stock Exchange and may from time to time make certain
purchases of, or arrangements to purchase, LSE Shares or futures contracts or
indices over LSE Shares outside the United States, other than pursuant to the
Final Offers, before or during the period in which the Final Offers remain open
for acceptance, and (ii) NAL, its affiliates, or their respective nominees or
brokers (acting as agents), may from time to time make certain purchases of, or
arrangements to purchase, LSE Shares outside the United States, other than
pursuant to the Final Offers, before or during the period in which the Final
Offers remain open for acceptance. These purchases may occur either in the open
market at prevailing prices or in private transactions at negotiated prices.
These purchases, or arrangements to purchase, shall comply with applicable rules
in the United Kingdom, including the City Code, the rules of the UK Listing
Authority and the rules of the London Stock Exchange and applicable US
securities laws (except to the extent of any exemptive relief granted by the US
Securities and Exchange Commission from Rule 14e-5). Any information about such
purchases will be disclosed as required in the United Kingdom pursuant to the
City Code and will be available from the Regulatory Information Service of the
UK Listing Authority and will be available in the United States at
www.nasdaq.com.

The NAL Directors and the NASDAQ Directors accept responsibility for the
information contained in this announcement, save that the only responsibility
accepted by them in respect of information in this announcement relating to LSE,
which has been compiled from public sources, is to ensure that such information
has been correctly and fairly reproduced and presented. Subject as aforesaid, to
the best of the knowledge and belief of the NAL Directors and the NASDAQ
Directors (each of whom has taken all reasonable care to ensure that such is the
case), the information contained in this announcement for which they accept
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of such information.




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