NASD Board Approves Preparation for Extended Trading Hours - Calls on Industry to Proceed Jointly and Responsibly

The National Association of Securities Dealers, Inc. (NASD®), has announced that its Board of Governors has approved a staff proposal to proceed with preparations to extend the trading hours of The Nasdaq Stock Market®. However, NASD Chairman and Chief Executive Officer Frank G. Zarb cautioned that "piecemeal implementation of extended hours would be detrimental to the marketplace and therefore, whenever this trading begins, it should be with the full range of investor protections that are available during current trading hours." These protections include market transparency, broad quote dissemination, equal access to for investors, automatic execution, limit-order display and computerized regulatory review. Maintaining these investor protections will require that Nasdaq® and NASD Regulation® operate during whatever extended hours are determined. The Board authorized staff to coordinate with the SEC and to continue to consult with members in order to achieve an orderly transition. All of the market participants must work together to ensure that any extended trading hours session is open, efficient and fair. Among the issues to be worked out is the coordination of technology preparation by all of the major players so that the transition to an extended hours session is as smooth as possible. In addition, a program to assess the impact on small broker/dealers should be implemented, including steps necessary to facilitate the small broker/dealers' participation in the expanded marketplace so that everyone benefits. Though Nasdaq is proceeding to prepare for extended hours, it is likely that a full, responsible and coordinated effort will take some time. If alternative trading systems and others begin, initiate, or proceed to trade stocks in an extended hours trading session, then The Nasdaq Stock Market will expedite its implementation plans. In other words, if a portion of the industry acts to preempt an orderly transition, then The Nasdaq Stock Market is prepared to move quickly. The NASD believes that a joint industry-wide effort is also needed so that investors are educated about the differences between the current trading day and an extended hours session, including, for example, the likelihood that there will be less liquidity in an after hours session. The NASD is committed to working with all market participants and regulators to ensure a unified approach to an extended trading day. We invite the other markets, particularly the New York Stock Exchange, to join this effort so that we provide ultimate protection to investors and preserve market integrity. The NASD is the largest securities-industry, self-regulatory organization in the United States and parent organization of NASD Regulation, Inc., and The Nasdaq-Amex Market Group, Inc. Through its regulatory subsidiary, the NASD develops rules and regulations, provides a dispute resolution forum, and conducts regulatory reviews of member activities for the protection and benefit of investors. Through The Nasdaq-Amex Market GroupSM, the NASD operates The Nasdaq Stock Market and the American Stock Exchange (Amex®). The NASD oversees the nation's 5,600 brokerage firms and more than half a million registered brokers. Consumers can contact the NASD to obtain the disciplinary histories, as well as other selected background information, of member firms and individual brokers or to get information on how to lodge a complaint.